Bitcoin is a decentralized person-to-person payment system that is not powered by middlemen or any central authority. Mining can be described as the process of spending computing power to process Bitcoin transactions, make the network secure, and keep all people in the Bitcoin network synchronized together. This process is viewed as a mining process because it is the temporary mechanism that is used to create and issue new Bitcoins.
How Bitcoin mining works
One can start mining Bitcoin by simply running the software with a specialized hardware. The mining software is designed to listen to transactions broadcast through person-to-person network and then perform important tasks to complete those transactions. Miners earn more money from transactions paid by users of the software and the newly created coins issued according to the set formula.
For any new transactions to be confirmed, miners need to include a block together with a mathematical calculations as a proof of work. To generate these proofs, miners have to try millions of calculations in one second. The system requires the miner to do these mathematical calculations before their transaction can be given a nod by the system, and for them to be rewarded. Entry of more miners leads to adjustment of average time taken by each miner to locate a block. The average time is normally ten minutes. This is done to increase the competitiveness of the mining business and make it difficult for any person to control the Bitcoin mining process.
Miners cannot reverse previous transactions. This is because; proof of work in the network is set out to rely on the other blocks to force a well defined chain of the blocks. Thus, if a miner decides to reverse the transaction, they will be forced to recalculate proofs of activity of all the previous transactions, a process which is not easy. If a miner finds two blocks at a time, they are supposed to start working on the their first block before switching to the largest sequence of blocks when the next block appears. This procedure allows Bitcoin mining to have a universal processing power.
The network can detect any fraudulent activity that miners could engage in. Bitcoin nodes automatically rejects any block withdata that is not consistent with the set rules of the mining process. This means that miners cannot increase their rewards or manipulate the network through cheating or corrupt ways. Thus, the system poses no risk of losing your investment during the mining process. Miners then can visit exchanges where they can sell their coins for cash.