Explaining everything about mining

Blockchain, cryptology, and mining are the most essential. Blockchain technology is the main technology that powers Bitcoin and it is a log that stores all transactions made with this cryptocurrency. With cryptology, Bitcoin users gain a certain level of anonymity as their data is turned into codes.

Lastly, mining is equally important as the other two processes that we mentioned above. We wanted to focus a bit more and explain why is it so important, what are its benefits, etc. Without any further ado, let’s dive into the details and get familiar with the process.

Why is it so important?

There are two reasons why mining is extremely important. The first one is that it allows the network to thrive and progress forward. Miners are the people that participate in this process and their main task is to record Bitcoin transactions. In doing so, they are updating the blockchain daily and update the list often.

The second reason why Bitcoin is so important is that is the main way through which users make a profit. The reward for recording these transactions is Bitcoins. The more transactions you verify; the more Bitcoins you will receive as a reward.

After that, you turn to trading sites that can help you sell your Bitcoins and maximize your profits. Reputable trading platforms such as Bitcoin Code even use AI systems that help you in the process of selling Bitcoins by collecting data about the cryptocurrency and using it to predict is future fluctuations. That is the reason why the daily profitability rate at sites like the one mentioned above is so high.

Not only that, but you can also use Bitcoins as a payment method for various products and services. Some of the world’s most reputable brands accept Bitcoin transactions. Some of those brands include Tesla, Wikipedia, Shopify, Microsoft, Starbucks, and Expedia.

What does mining actually include?

The first that that is worth mentioning is that mining is free. That is the main reason why it is the most preferred method of earning Bitcoins. But, it is far from easy, hence not many miners are able to do it. In layman’s terms, Bitcoin mining includes solving various complex puzzles. Solving these puzzles can take days, weeks, maybe even months.  

Are there other ways to earn Bitcoins?

For those that are not willing to dive into the world of mining, there is one additional way to earn Bitcoins – you can always choose to buy them. But, there are some risks involved in this process, especially if you are looking to purchase Bitcoins and re-sell them to make a profit.

Bitcoin has a very high volatility rate. Hence, its value fluctuates and goes up and down with each passing day. That means that the chance of buying Bitcoins at a certain price and then noticing that its value dropped the next day is very likely. These scenarios are the reason why so many people actually lose money on Bitcoin.

Not only that, but nobody guarantees that Bitcoin will top the price from which you bought them for, hence the potential risk is much greater. Even if you manage to sell your Bitcoins at a price that is higher than the one you bought them for, the profit will not be as nearly as big as the one that you would make by mining it. A reminder – Bitcoin mining is free.

This risk is increased even more if you choose to go in for a short-term investment. Short-term investments are made when traders expect the price of Bitcoin to drop in value and make a fast profit.

Keep up with the top stories from Reader’s Digest by subscribing to our weekly newsletter.