Auditor miners are compensated for their efforts. They are in charge of ensuring that Bitcoin transactions are legitimate. Satoshi Nakamoto, the creator of Bitcoin, devised this standard to keep Bitcoin users honest. Miners assist to prevent the “double-spending problem” by validating transactions.
When a Bitcoin owner spends the same bitcoin twice, this is known as double-spending. This isn’t an issue with real currency: if you hand someone a $20 note to purchase a gift, you don’t have it anymore, therefore there’s no way you could use it to buy lottery tickets next door. While counterfeit money is a possibility, it isn’t the same as spending the same dollar twice. “there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original.” is the basic definition.
Let’s pretend you have one genuine $20 bill and one counterfeit $20 bill. If you tried to spend both the genuine and phoney bills, someone who took the time to look at the serial numbers on each of them would notice that they were the same, indicating that one of them was fake. A Bitcoin miner works in a similar way, checking transactions to ensure that users have not attempted to spend the same bitcoin twice.
Miners are eligible to be paid with bitcoins once they have validated 1 MB (megabyte) worth of Bitcoin transactions, known as a “block” (more about the bitcoin reward below as well). The 1 MB restriction was imposed by Satoshi Nakamoto and is a source of contention among miners, who feel the block size should be raised to contain more data, allowing the bitcoin network to process and validate transactions faster.
Note that a coin miner can earn bitcoin after confirming 1 MB of transactions; however, not everyone who validates transactions will be paid out.
1MB of transactions can potentially be as little as one (though this is extremely rare) or as much as several thousand. It is dependent on the amount of data consumed by the transactions.
“So, even after all that labour of validating transactions, I might not get any bitcoin in return?” Yes, you are accurate. To earn bitcoins, you must fulfill two requirements. One is a result of work, while the other is a result of chance:
- You must verify about 1MB of transactions. This is the most straightforward phase.
- You must be the first miner to solve a numerical issue correctly, or as close to correctly as possible. Proof of work is another name for this procedure.
“What exactly do you mean when you say ‘the correct answer to a numeric problem’?”
The good news is that there is no advanced math or calculation required. You would think that miners solve tough mathematical problems, but that isn’t the case. They’re attempting to be the first miner to generate a 64-digit hexadecimal number (a “hash”) that is either less than or equal to the goal hash. It’s essentially a guessing game.
The bad news is that it’s guessing, but with the total amount of viable estimates for each of these problems in the billions, it’s very taxing. Miners require a lot of computer power to solve an issue initially. You’ll need a high “hash rate” to mine successfully, which is measured in megahashes per second (MH/s), gigahashes per second (GH/s), and terahashes per second (TH/s).
There are a lot of hashes there.
Cryptocompare provides a useful calculator for estimating how much bitcoin you might mine with your mining rig’s hash rate.