Trust is everything! Bitcoin security features ensures your money is safe for the next 100 years.
In this section, you will learn how the Bitcoin Network is secured and why it will still be here for the foreseeable future.
Mining is the process of spending computing power to process transactions, secure the network, and keep everyone in the system synchronized together. It can be perceived like the Bitcoin data center except that it has been designed to be fully decentralized with miners operating in all countries and no individual having control over the network.
This important process is referred to as “mining” as an analogy to gold mining because it is also a temporary mechanism used to issue new bitcoins. Unlike gold mining, however, Bitcoin mining provides a reward in exchange for useful services required to operate a secure payment network, known as “Proof of Work”.
Mining will still be required after the last bitcoin is issued, approx. in the next 100 years.
Anybody can become a Bitcoin miner by running software with specialized hardware. Mining software listens for transactions broadcast through the peer-to-peer network and performs appropriate tasks to process and confirm these transactions. Bitcoin miners perform this work because they can earn transaction fees paid by users for faster transaction processing, and newly created bitcoins issued into existence according to a fixed formula.
For new transactions to be confirmed, they need to be included in a block along with a mathematical proof of work. Such proofs are very hard to generate because there is no way to create them other than by trying billions of calculations per second. This requires miners to perform these calculations before their blocks are accepted by the network and before they are rewarded. As more people start to mine, the difficulty of finding valid blocks is automatically increased by the network to ensure that the average time to find a block remains equal to 10 minutes. As a result, mining is a very competitive business where no individual miner can control what is included in the blockchain.
The proof of work is also designed to depend on the previous block to force a chronological order in the blockchain. This makes it exponentially difficult to reverse previous transactions because this requires the recalculation of the proofs of work of all the subsequent blocks. When two blocks are found at the same time, miners work on the first block they receive and switch to the longest chain of blocks as soon as the next block is found. This allows mining to secure and maintain a global consensus based on processing power.
Bitcoin miners are neither able to cheat by increasing their own reward nor process fraudulent transactions that could corrupt the Bitcoin network because all Bitcoin nodes would reject any block that contains invalid data as per the rules of the Bitcoin protocol. Consequently, the network remains secure even if not all Bitcoin miners can be trusted.
Spending energy to secure and operate a payment system is hardly a waste. Like any other payment service, the use of Bitcoin entails processing costs.
Financial systems, such as banks, credit cards, ATMs, and armored vehicles also use a lot of energy to maintain services around the clock globally. Unlike Bitcoin however, their total energy consumption isn’t as transparent or easily measured.
The benefit to Bitcoin’s core design is how mining continues to optimize over time and with specialized hardware consuming less energy. Future operating costs of mining should continue to be proportional to demand.
Bitcoin mining can become highly competitive and less profitable for miners at any given moment. For some, or smaller miners, they may choose or have no option but to shut down activities and resume when conditions are more favorable.
Mining machines expel a tremendous amount of heat. Mining operation turning over the most profits have found ways to efficiently recycle this energy.
An optimally efficient mining network is one that isn’t consuming any extra energy, like green-energy plants or data centers. The principles and economic benefits of mining bitcoins continue to attract passionate individuals working towards this ideal.
Miners are very important in the process of creating bitcoins but more important in securing the network. The more miners to join the network, the more secure it will become.
Under the hood, mining creates the equivalent of a competitive lottery that makes it very difficult for anyone to consecutively add new blocks of transactions into the blockchain.
This protects the neutrality of the network and prevents individuals from cheating the system.
Mining makes it exponentially more difficult to reverse a past transaction by requiring the rewriting of all blocks following a transaction and before the next.
Yes and No! Technically the Bitcoin network can be shut down by no one mining or using bitcoin. But, practically at this moment in time with the amount out distributed users around the world, shutting down the Bitcoin Network is unlikely.
At the basic core level, an individual/organization must have control of majority of the network at a given time to execute such a takedown, like taking down an illegal website.
However, to shut down the entire Bitcoin Network, one must simultaneously shut down all miners around the globe at the exact millisecond.
What about loss of internet or total black out? Keep in mind, it only takes 1-3 miners to have a full network working, compared to the thousands of miners housed in one large-scale mining facility. Further, add technological innovations in internet connectivity and solar-energy for reliable always-connected smart devices and future.
Shutting down the Bitcoin Network would require an enormous technological and financial undertaking too great of a cost to attempt at this moment, and if to fail.
In the early days of Bitcoin, anyone could mine bitcoins by finding a new block using their personal computer’s CPU (processor) or/and GPU (graphic card).
As more people and organizations joined the network and started mining, the difficulty of finding new blocks increased dramatically.
Today, the most cost-effective method of Bitcoin mining is using specialized dedicated mining hardware called ASIC miners, through large-scale mining operations.
The technology behind Bitcoin’s Network – the protocol and the cryptography together – has a strong security track record, thus far. In addition, we’re probably witnessing one of the largest and most secured distributed computing platforms, to exist across the globe.
The most common vulnerability when discussing Bitcoin, is user error.
Apart from scams, users may accidently delete apps, private keys; among theft and lost.
Cash also includes high levels of risk from theft/destruction; however, Bitcoin is solely digital which makes securing your funds a higher priority. Always employ sound security practices to protect your money and/or use financial service providers offering strong levels of security and insurances.
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