We all have heard about bitcoins and how cryptocurrencies work. You must have come across various bitcoin predictions or various articles that debate on how profitable bitcoins are. In this blog, we will learn about the evolution of bitcoins and how they have changed over a period of time.
Bitcoin is basically a decentralized alternative to the traditional banking system. This means that the person who owns bitcoin will be able to indulge in a digital transaction without the involvement of any centralized system or authority. Usually, the way that the banks work is by updating a ledger that holds the balance for everyone in the system. However, it is important to assure that no person has that much authority that can get hold of the system.
This is why it is important to get used to a system that has a decentralized ledger. The cryptocurrencies such as bitcoins give the miners the ability to update the ledger without giving them too much power so that they don’t become corrupt or negligent for their work.
When bitcoin first started out there were not many miners out there. A fun fact is that when bitcoin was invented Satoshi the inventor of bitcoin and his friend Hal Finney were the only people who were bitcoin miners back in the days. Back in 2009, when mining was merely a thing, a lot of people used normal CPU for mining Bitcoin.
However, with the changing times, people gradually moved to GPU mining which is a special component that is added to the computers which help in carrying out more complex calculations. GPUs were mainly popular among gamers as they supported high definition graphics. This is why they became popular for calculating and managing cryptocurrencies.
Another evolution came later on when FPGA mining became popular. FGPA is a hardware which is connected to a computer in order to run a set of calculations. They are 3-100 times faster than GPUs although they are quite similar when it comes to functions. They are a little harder to configure which is why they were not used as commonly as GPUs when it comes to mining.
During this time a new breed of a miner was introduced which was called the ASIC mine. ASIC stands for application specific integrated circuit. These hardware pieces were specifically created for the purpose of mining. While GPU, CPU and FPGA could be used for various other purposes, ASIC was exclusively designed for mining purpose. Today. ASIC miners are the depiction of current mining standards.
2013 also saw the launch of some ASIC miners that came in the form of USB. However, these became quite obsolete very quickly. Later, the technology quickly evolved and new and powerful miners were being launched very quickly. A new launch was recorded almost every 6 months which made it compulsory to upgrade.
Since the beginning of 2016, it was observed that the crazy technology race has slowed down a bit. Due to the saturation level and technological barriers releases of new miners had stopped considerably.
For someone who has just entered the bitcoin mining game, the competition in the market could belittle overwhelming for you. Even though you must have bought the best possible miner out there-there is still a large possibility that you are at a huge disadvantage as compared to professional bitcoin miners. This is why bitcoin mining pools came into existence. Mining pool basically means that a group of miners combine their mining power to compete more effectively. Together they form a ‘pool’ which makes competition less difficult.
Once the pool manages to win the competition and whatever reward is earned it is distributed equally. The distribution is done on the basis of the contribution made by each miner. This is the easiest way for small miners to have a chance of earning bitcoins. There are a dozen large pools available today that can provide the chance to mine bitcoin and update the blockchain.
The answer to this question depends upon a lot of factors. While calculating the profitability of Bitcoin there are a lot of factors to be considered. To begin with, hash rate refers to a miner’s performance. This means that how many guesses your computer can make per second. Hash rate can be measured in MH/s, GH/s and even PH/s. Bitcoin reward is yet another method by which the profit can be calculated. The number of bitcoins is generated when a miner finds a solution.
The number started at 50 during 2009 and it is halved every 210, 000 blocks. The current number of bitcoins that are awarded per block is 12.5. the last block has occurred in July 2016 and the next one will be in 2020. you can also have a look at the mining difficulty which is the number that displays how hard it is to mine bitcoins.
Now that you have finished reading this extensive guide, you might have a clear picture of how you can mine bitcoin in an orderly manner. Depending upon the Bitcoin’s price it can be profitable to just buy them instead of going for mining. Make sure to check some bitcoin forecast before you make the decision.