Mining for beginners

What is mining?

The process of the emergence of new bitcoins - one of the most important aspects kriptovalyutnoy industry. Why is he called the Mining?
Many people are accustomed to the fact that "digital" and "virtual" does not cost anything. After all, I've found you can simply copy and use it. This Bitcoin is the first technology that is able to break this stereotype is not only for ordinary people, but for the most staunch supporters of the free software distribution and content.
The Bitcoin «copy protection" built conceptually and work around it much more difficult to crack than the protection program. No matter how much you may copy the wallet or the base units of data - you will receive a copy of the same bitcoins, which can be spent only once.

Despite the fact that the client code and the Bitcoin protocol is fully open, the creation of new coins - a complicated and expensive process. It is impossible to generate bitcoins longer than planned creator of technology. And to get a new coin - the necessary substantial investment in equipment, facilities, cooling and electricity. That is why Bitcoin called "digital gold" and portrayed in the form of gold coins.
The word "mining" comes from the English «mining», which means "mining" and it came into use by analogy with the extraction of gold. The more devices in the network that are engaged in mining, the better the Bitcoin network is protected from attacks. The owners or operators of such devices are called "miners,". Also often "miner" refers to the computing device, the necessary for calculations in the Bitcoin network.
Each new unit includes a cryptographic signature based on the previously formed. Since the blocks are concatenated with each other, forming a "chain blocks", "blokcheyn» (blockchain). Blocks can be branched chain, but in the end receives a confirmation that branch blokcheyna, over which runs the majority of miners. Thus self-regulation is carried out online.

Mining is a process of calculating a cryptographic signature block. Block (block) in the Bitcoin network is called a data array, in which information is recorded on the transactions that have come to the network after the establishment of the previous block (approximately the last 10 minutes). The Bitcoin is used widespread in the Internet hash algorithm SHA256. Member of the network ensured the cryptographic calculation block signature, receives a reward of Bitcoin. At the same time, to obtain the "gold ingot" as a precious "generating transaction" it is necessary to shovel tons of waste rock - not suitable to the block hashes.
Through mathematical theorem in the field of cryptography, which is called "proof of work» (Proof-of-Work, PoW), the computation unit is dependent on the programmed parameter such as the complexity (difficulty). Computational complexity in Bitcoin network changes every 2016 blocks (about two weeks under 10-minute unit) and is set depending on the average time for which all the blocks after the previous count was found.
But the complexity - not the most important obstacle to wealth. Every four years, the remuneration of the block is reduced by half. At the start of the system in 2009 for every unit generated miners received 50 BTC, and now the reward is 25 BTC. The following awards reduction is expected in the first half of 2017. The exact date can not be calculated because it depends on the dynamics of production complexity.
What is Bitcoin miners need

Mining - Bitcoin foundation of integrity and reliability of the system or any other cryptocurrency. miners work provides all the basic functions of the network:
Confirmation of transactions (transactions);
network protection from making false information (fake transactions and units);
Bitcoin network protection from different types of attacks;
Support for decentralization Bitcoin network.
A transaction between two parties Bitcoin network have to be confirmed by the participation in the block. If you create a block miner took it and turned on the unit, the coin contained in the transaction is made available for further use. An attacker who attempts to feed the fake network transaction will be discarded at the stage of supply.
Slipped a network block? To do this, you need to have a signature, formed on the basis of the previous block. If the signature is not present, it is necessary to calculate - and then repeat the entire series of calculations, which were needed for the previous the previous block, and so on, up to the first unit created January 3, 2009. That is so rude to hack the network and install it in your order, you need to re-count the entire blokcheyn.
It is absurd to a lot of work - in fact, the attacker easier not to recalculate the entire volume of computations in the Bitcoin network again for the sake of just one unit - and join with their computing power to honest work.

Branch out a chain of blocks? This is possible, but this branch is doomed to remain alone, an orphan - orphaned, if you do not maintain it all the growing computing power, more than the combined capacity of all "honest" miners, which also requires a huge cost and devoid of practical meaning.
Investing in equipment only several hundred million dollars, we can obtain the power of 51% or more computing power bitcoin network. This attack is called - "Attack 51%." But in this case it would be a celebration, rather pyrrhic victory. The attacker will only be able to "freeze" the transaction online or arbitrarily change the payment from its own purse that will not bring much wealth.

Decentralization, that is independence from a single control center - one of the key advantages over traditional currency Bitcoin, and she provided it is a miner who are scattered all over the world. Disabling of the computing power will not stop the transactions in the network - it needs to turn off all the miners to the last.
The concentration of power in the hands of large pools of data centers and creates a threat of decentralization. But mining is spreading wider and now there is one pool, which could get more than 50% of the network. A data centers scattered across several continents - from Norway and Greenland to Australia.
Blitz-history of mining

The first signature block if there is free time and the absence of competition could even calculate manually the usual pencil on paper. In 2009, for the unit calculation is quite enough of the programmable calculator.

Of course, in practice, no one did, and mining led enthusiasts to CPU - CPUs ordinary home computers. Era calculations on processors was quite long - almost two years. When the miners launched a program that uses the CPU to calculate the signature block, the Bitcoin was worth no more than a few cents on the super-profits when nobody thought.
In 2011, the program for mining on the GPU (graphics processor graphics card) has been developed. He copes with these calculations is much better, as the top-end graphics cards have at their disposal from tens to hundreds of smaller stream processors, each of which can count hashes separately. Thus, it was possible to "parallelize" computing and accelerate their several orders of magnitude.

There were computers with multiple graphics cards, which are called «rig» (rig), and then the whole farm with tens and hundreds of cards, which are engaged exclusively in the calculations for the Bitcoin network. It was then that the so-called "pools" - the collective of mining sites, and a single, or "solo-mining", useful to decentralize the network has become risky and impractical. This era lasted for two years. The next step was the use of FPGA modules, and then the development of specialized ASIC chip, which can be engaged only in mining, but much faster and more economical than any graphics card.

With the advent of ASIC Mining irreversibly changed and began the "race heshreytov", which is still ongoing. Since the beginning of 2013 the producers mayningovogo hardware accelerated marched all the way to the development of microelectronics - from 130 nm Avalon I to 16 nm chips with a three-dimensional diagram of KnCMiner, which have not yet gone into mass production.
What and how am Main today

Easy Money

Bitcoin mining profitability falls in the same progression as the growing complexity of the calculations. Therefore, income from of mining can now be obtained only with very cheap electricity, plus a huge amount of computing devices equipped with the most modern chips and cooling systems. The forum Bits.media amateur miners, offers a variety of industrial and home-made device for those who want to engage in mining houses, and several manufacturers are offering their latest developments. On the profitability of this activity is uncertain, as it has long been balanced around zero, depending on the slightest movements of the course and complexity.
Even more questionable the so-called "cloud Mining", which means rent computing power for the calculations in the "cloud" - or rather, in a data center service provider. In most cases you pay for electricity and depreciation of equipment, besides all the other risks borne by you. Services cloud of mining, which do not charge for electricity, often pyramid schemes.

However, having studied the market well, you can find enough attractive offers for the home of mining that will generate income comparable to the average salary of an office worker.
If you want to Bitcoin mining on an industrial scale, you need a room of the former military base in the Arctic or tunnel, equipped with a metal door one meter wide and intelligent systems condensing cooling that serve hundreds of thousands of boards with millions of chips. It describes its data centers is one of the leading manufacturers of miners and the owner of a large cloud service - KnCMiner. So you can at least keep up with competitors.
Earn mining bitcoins without big investments? This time it took a few years ago. Now to make a profit on the extraction, using processors and graphics cards is possible only in the alternative cryptocurrency, ie fork or altkoynah.
alternatives

When the ASIC-miners numerous forks began to use the device is no longer necessary Bitcoin. One of the most common alternative hashing algorithms - Scrypt - for a long time remained a haven for farm owners of video cards. But in 2014 and appeared ASIC chips for him. By this time I arrived a "zoo" of new algorithms - Scrypt-N, Scrypt-Jane, X11, X13, X15, Cryptonote, Groestl, Quark and others. Many altkoyny now quite profitable Mein PC processors or graphics cards.
There is a digital currency, using another theorem, it is called "proof storage», (Proof-of-Stake, PoS). In contrast to the "proof of work» (Proof-of-Work), which uses the Bitcoin network, based PoS currency does not require an ever-growing computing power. They are necessary for the functioning of blokcheyna only program-wallets are constantly zapuschёnnye on users' computers, and mining is due to the duration of storage of coins. Some forks are various hybrids PoW and PoS technology.
There are also more exotic options. For example, it is gaining in popularity a new kind of mining in which cryptocurrency (Burst and analogues) is charged for the use of space on the hard disk or other media. This technology is called "proof of the capacity" (Proof-of-Capacity, PoC). Data carriers are now booming and the business also has prospects. Such decentralized storage can be useful, for example, for a cheap hosting sites or distributed large amounts of not very valuable data - such as the collection of images, photos, music or video.
The future of mining

When you create a new, faster chips will be used technologies such as optronics, photonics, superconductivity and quantum computing. Economically, Bitcoin mining is most justified in Iceland, where it is possible to obtain energy by geothermal sources, and cooling of the Arctic Circle near the very nature provides. Maybe there will mayningovye farm in the Sahara and Tibet, where, for computing and cooling utilization of solar energy will be used. In the distant future, a good region for mining will be the coast of the Arctic Ocean and Antarctica. Energy for the calculation there can be obtained at the expense of tidal power, cooling chips with outside air.
And perhaps in a few years will prevail more economical types of mining, such as Proof-of-stake and Proof-of-Capacity, or will be invented new ones. Then the huge farm, devouring megawatts of electricity, will leave in the past. But the idea of ​​decentralized financial systems have earned the trust and will develop regardless of how it will be ensured reliability.