We use computers for many different tasks, but the last thing we could think about a few years ago is that we would use our PC for mining tasks.
In effect, cryptographic currencies , such as Bitcoin , are generated using certain algorithms, and to achieve them, as well as to manage transactions, process power is needed. Putting your computer to work to create new blocks and approve transactions is what is known as mining Bitcoins . If you find one, you’ll keep it for yourself.
Bearing in mind that, to this day, a Bitcoin is worth $ 621 , it does not seem like a bad deal. In addition you also earn a rate on the transactions you approve. But it is not as simple and as profitable as it seems.
* How does Bitcoin work?
The cryptographic virtual currencies are not new. The first algorithms date from 1985 .
Basically, they consist of long strings of encrypted numbers that conform to an algorithm, which is what tells which codes are valid currencies, and which are not.
Bitcoin was born in 2009 , and marked a before and after for its status as a decentralized currency . It does not depend on a server, a bank, or a country to regulate its value. In a way, it is the first democratic currency , because it is its users who establish the rules and the exchange rate.
As we have said, each bitcoin is an encrypted code that is associated with a bitcoin address, belonging to a person . The bitcoin address indicates who owns the coin, since the concept is the same as the money in cash : the possession is anonymous, the owner is the one who has it in his possession at all times.
The bitcoin addresses are kept in purses , which belong to natural persons.
When two users make a transaction of bitcoins (they exchange currencies, they pay or they charge with the currency) this operation is not valid until it is validated by the users of the Bitcoin P2P network , made up of other users, and by miners.
The transactions are grouped in blocks and require complex mathematical calculations to be processed, a power of calculation contributed by the miners . As a reward for their work, every 10 minutes a new block is generated with a new bitcoin without an owner , which is shared by the miners who participated in the creation of the block.
In effect, new bitcoins are generated every so often, this is how the market grows. There can only be a maximum of 21 million Bitcoins , but it will take years to reach that figure.
As there are more and more miners, each time it touches less the distribution , that is why it allows a part of the transactions, a kind of “tip” or rate, to go to the miners . This rate is chosen by the one who pays, and the higher it is, the faster they process your transactions.
In effect, a transaction must be processed within a block, and that operation must be approved by other miners and users who are in the network (the Bitcoin software installed does it).
Only when most users consider a transaction good is considered valid . The normal thing is to wait until 6 or 7 blocks are generated, around an hour , so that a payment or a bitcoin fee is considered valid.
Through the public and private keys of those involved, the bitcoin address is changed, to indicate the new owner of each currency.
Advantages and disadvantages
As you can see, Bitcoin and other equivalent currencies do not need a controlling body to regulate themselves . It is the users of the Bitcoin network themselves who decide whether a transaction, or a new currency, is valid or not.
Coins are not associated with names, only with encrypted keys, so payments are anonymous .
At the same time, all transactions are registered in the chain of blocks and are public , so it is easy to detect those who try to cheat.
Since transactions and currencies are approved by combining the calculations of thousands of computers in the P2P network, it is very difficult to hack or distort transactions, because nobody has the processing power to overcome all these thousands of “honest” computers working together.
Surely you will be asked, in the absence of a regulatory body, how is the value of Bitcoin established ? It depends on the number of users of the Bitcoin P2P network, and its activity. If there are many users, miners and transactions, the value goes up.
Currently, a bitcoin costs 622 dollars, but it is very influenced by the problems of the system itself.
But at the same time prestigious economists like Nouriel Roubini consider it a Ponzi or Pyramid Game , which can lead to chain crashes.
Too many questions that you do not know if they are real, or interested. Governments and bankers do not like a currency they can not control, and they will do everything possible to sink it.
* Is money made by mining Bitcoins?
This summary of the operation of crypto currencies in general, and Bitcoin in particular, allows us to understand what is coin mining , and how it works.
You have to run software that connects you to the P2P network of the currency. In exchange for part of the processing power of your computer, you receive a payment in that currency , equivalent to the power you supply, either when a new block is generated, or through a rate in transactions.
However, you must weigh the expenditure on electricity, a physical expenditure of the components of your equipment, and a reduction in your performance while you are mining.
Is it profitable to mine coins? Well, being honest, with a home computer, no . Keep in mind that mining became fashionable three or four years ago, and many people began to connect computers in parallel and several graphics cards and CPU.
The Cryptographic coins are a fascinating technology, which is taking its first steps. Some predict that they will change the economy, as the email changed the traditional mail or the Internet itself, communications. Others are convinced that governments will curb them or try to control them.
If you use them, always remember that they are high risk investments . Do not put all your savings in bitcoins! But to trade with them, can be a very interesting alternative to traditional payments.