Before investing funds to operate their own mining industry, beginners need to understand the principles of mining in detail: including the principle of Bitcoin, the value of Bitcoin, mining principles, profit calculation, compliance basis, etc.
Bitcoin Principles and Mining Principles
The Bitcoin network is the originator of blockchain technology. Bitcoin is the first application on the Bitcoin network and the first application in the blockchain industry.
The Bitcoin network was born in 2009 and is the first killer application spawned by blockchain technology. The Bitcoin network is a payment system. What is a payment system? The banking system is a payment system, Alipay is a payment system, and the Bitcoin network is also a payment system. It is the first payment system based on blockchain technology, which can realize the basic functions of the banking system and Alipay system.
Like the banking system and Alipay system, as a payment system, the Bitcoin network can be disassembled into three parts:
First, in the payment system, users will have their own accounts. In the banking system, users have their own bank card numbers. In the Bitcoin system, a public key address is an account, and this address has a matching password called a private key.
Secondly, in the payment system, users can store assets and transfer assets based on their own accounts. No matter it is the banking system, Alipay system or Bitcoin system, it has this function. RMB assets are stored and transferred in the banking system and Alipay system, and Bitcoin assets are stored and transferred in the Bitcoin network.
Finally, in the payment system, there will be a settlement system to clear daily transactions and ensure that the user's account balance changes caused by his own payment behavior are correct. For example, in the banking system, the head office of the bank and UnionPay are doing this. I use a bank card to make 1,000 yuan to a friend, and the settlement system will deduct 1,000 yuan from my account and add 1,000 yuan to my friend's account, and make sure that these two operations take effect at the same time. Alipay also has this system.
Where is Bitcoin's settlement system?
Both the banking system and the Alipay system are typical centralized systems, similar to such a giant computer that clears the daily transactions of the banking system and the Alipay system. The transaction data that occurs in the whole country are transmitted to this supercomputer, the computer judges whether the transaction is feasible, and if feasible, changes the ledger of both parties according to the requirements of the transaction.
Bitcoin is not like either of them. In Bitcoin, there is no giant computer, but a large group of small computers that work together to clear payment transactions across the network. Each such small computer is a mining machine.
Relying on a group of small computers instead of a giant computer for liquidation, the liquidation efficiency of the Bitcoin system is relatively low. The reason for choosing such a mechanism is that Bitcoin pursues decentralization. In the banking network or Alipay network, if you take a giant computer and hang up, the entire network will be paralyzed. In the Bitcoin network, the failure of a small computer will not affect the stability of the Bitcoin network.
In the current Bitcoin network, there are probably millions of small computers, that is, millions of miners performing liquidation work for the entire network. How to coordinate these millions of miners and integrate them into a force is a delicate and complex coordination work. This coordination mechanism is the consensus algorithm. As we all know, the consensus algorithm of Bitcoin is called POW.
How to integrate the behavior of these millions of miners? Satoshi Nakamoto is very smart. He used complex mathematical algorithms to transform the liquidation work into a series of quizzes with prizes. Every 10 minutes, a difficult question is asked, and millions of miners quiz at the same time. The process of the miners guessing the quiz just helps the entire system to complete the liquidation work. This guessing system is very fair, and the miners can only guess the answer randomly. As for why the miners are willing to guess the puzzle, it is because the lucky one who guesses correctly can get 6.25 bitcoins.
Due to the abundance of prizes, miners began to improve their guessing speed. Originally, they could guess 10 times a second. Later, with more advanced equipment, they could guess 10,000 times a second, which is considered an increase in computing power.
Therefore, we can define such an image of mining here: the so-called mining is the behavior of miners in order to obtain Bitcoin rewards, and bring their own dry food to participate in the Bitcoin network liquidation, in order to obtain the winning reward. The dry food that comes with it is the mining machine.
