Bitcoin is a digital currency that has been in existence since 2009. Individual efforts to contribute to the overall operation system can reward Bitcoin "miners" with Bitcoins. Bitcoin mining is basically payment processing work that involves solving complex mathematical problems to verify and record bitcoin transactions with special computer hardware and software.
The Mining Process
In Bitcoin mining, computer power is used to process transactions carried out with Bitcoins and to synchronize and secure the network. Miners are rewarded with Bitcoins for providing their computing power to the Bitcoin payment network. Using specialized hardware and software, miners work to confirm transactions and to show their work through a mathematical proof.
Confirmed transactions are included in a public, digital ledger called a blockchain. The competitive nature of the Bitcoin mining scene ensures that no single miner will be capable of controlling the block chain.
Mining Equipment
When it comes to both hardware and software used for Bitcoin mining, there are quite a few different options to choose from. What is widely considered the most efficient hardware option is application-specific integrated circuits that are custom-designed. By 2013, this was recognized as perhaps the only hardware for Bitcoin mining that could lead to a profitable operation, with the cost of electricity alone posing an overwhelming expense to miners using any other hardware options. There are a variety of open-source, free Bitcoin mining software programs, such as GUIMiner.
Rewards
As of 2014, a miner who completes a transaction process may receive a reward of 25 Bitcoins, and this amount is estimated to be awarded about once every 10 minutes. The market value of this reward is constantly fluctuating. The payment network has been arbitrarily limited to 21 million Bitcoins, meaning that after 21 million Bitcoins have been mined, mining will cease and currency that has already entered circulation will simply continue to circulate.
As time goes on, Bitcoins will become increasingly more difficult to mine, and the reward for successfully confirming a transaction and synchronizing the network will become smaller and smaller. For example, the current reward of 25 Bitcoins will be cut in half in 2017.
