| Paatar said: Could someone in layman’s terms explain “mining†to me? I’ve tried to understand it but I just can’t. How does it get “mined� What’s the process? Why does it consume energy? What’s using energy to mine it? |
As explained in my previous post, each block is validated by using computing power. The detail here is, that a hash is calculated that verifies both the current block and the previous one. But that hash has to fulfill some restrictions. To fulfill these restrictions a block contains a field that can be filled with any number. You have to pick a number for that field, so that the calculated hash for the block falls into these restrictions. As hash algorithms are highly unpredictable (by design), you basically have to try numbers (in difference to what SvennoJ said it doesn't have to be a prime number) until you find one that fits the conditions. That is what you need the computing power for and the computing power needs energy. The process of finding the next valid block is called mining.
The initial number of Bitcoins was given for the one mining the block, meaning, if you found the next block you could as part of the block transfer some amount of 'new' coins to your account. That number reduces over time towards zero, so that in the end the number of bitcoins is fixed. Miners also profit from mining by asking for a fee for each transaction (if you don't pay a high enough fee, your transaction might not be included in the next block and therefore not recorded in the Bitcoin network). So if you want your transaction to be recorded in the blockchain you pay a transaction fee (some percent of the transaction amount) and miners want to find the next block to get the transaction fee and the newly minted bitcoins as long as there are any.
