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How to mine Bitcoin

Bitcoin (BTC) 101: How to Mine and Use BTC

Intermediate Nov 8, 2022

The hype for Bitcoin is overly evident today—cryptocurrencies, in general. It currently tops the list as the most popular and most secure cryptocurrency. Perhaps this is because it is the first cryptocurrency ever created.

Bitcoin, Defined

By definition, Bitcoin is a cryptocurrency. It was first introduced in 2009 by an anonymous developer, Satoshi Nakamoto. Since then, it became the most well-known cryptocurrency, with the highest value among thousands of other altcoins. Unlike fiat currencies, Bitcoin was developed using a decentralized ledger—a blockchain network.

In a white paper that Satoshi Nakamoto shared in late 2008, Bitcoin’s aim is to create a fully peer-to-peer electronic cash system. Come 2009, the very first Bitcoin block was mined—Block 0 or Genesis Block. This block contains cryptic text, which still remains a mystery today. 

Bitcoin uses the SHA-256 hashing algorithm to encrypt data stored on its blocks. In other words, the transaction data stored in Bitcoin’s blocks use are encrypted in a 256-bit hexadecimal number. This number, moreover, contains all of the transaction’s data and information, linked to the preceding blocks of that certain block. More so, these transactions are validated by the miners within the network. 

How Does Bitcoin Mining Work

What is bitcoin mining? By definition, it is the process by which new bitcoins are entered into circulation. It is also the network’s way to confirm transactions. It is a critical component of the bitcoin network’s development and maintenance.

‘Mining’ uses sophisticated hardware that solves complex computational math equations. It is possible to mine Bitcoin competitively using a personal computer, and the first computer to find the solution to these equations receives the next block of bitcoins, then, the process will begin again. The participants who solve these equations are called Bitcoin miners.

Bitcoin rewards the first miner to solve the equation. This serves as an incentive and motivation for people to mine—which in a sense, helps Bitcoin’s circulation and thus, ensures the validity of the transactions. 

As bitcoin mining became popular, however, more miners joined which lowered the chances of being able to solve the hash.

Buying Bitcoin; Described

As stated, bitcoin mining is one way to own Bitcoin. If you don’t want to mine bitcoin, however, you can purchase Bitcoin (BTC) from a crypto exchange.

To buy BTC, you will need to fund your crypto wallet with fiat currency like U.S. dollars, then, purchase BTC through the exchange or wallet.

There are several crypto wallets present today. It has different types as well. Fret not, we will tackle it next time. 

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Disclaimer: This article solely expresses the author’s thoughts, which may not reflect those of Hippo Wallet. Nothing in this article should be interpreted as investment guidance. Hippo Wallet encourages all users to do their research before investing in cryptocurrencies.