In the technology sector, nothing is impossible. In this era, there are digital ledgers that record data and encrypt them. Blockchain is a platform widely used for business purposes.
Some of the applications in blockchain include regulating taxation, being used for viewing advertisement insights, tracking money laundering, and voting matters among other functions.
The users in various networks in blockchain are defined as blockchain miners. Most businesses tend to use blockchain.
One of the reasons a company may use blockchain is to eliminate middlemen. Middlemen may sometimes tarnish a company’s name leading to loss of clients.
What are miners in blockchain?
Miners in blockchain are the peers in various networks who do transactions with one another. Blockchain mining is simply the operation of recording verified transactions in the blockchain ledger.
The main function of blockchain miners is to take part in cryptocurrency data transactions and add the linked transactions to the ledger.
The main exercise done by blockchain miners is to solve mathematical puzzles and every peer in the respective network has to confirm the answer. This is where a hash is formed. A hash aids in verifying transactions.
There are three categories of miners which are namely:
- Individual mining: This is rewarding a user in a network after solving a mathematical problem first.
- Pool mining: In this type of mining, users in a network come together to validate a transaction.
- Cloud mining: This is a type of mining that does not require computer software and hardware.
How do miners verify transactions?
The process of verifying transactions starts when one user requests a transaction. The block that represents the transaction will be broadcasted within the network through the nodes.
When the transaction is approved and verified, the update is spread across the network. The transaction block is then linked to the existing blockchain. The miners are rewarded according to Proof-of-work.
A transaction is verified before being added to the records in the ledgers. A transaction would take up to 3 hours to get verified.
The network traffic determines how long a transaction will take to be verified. There is a way in which one can fasten the verification process. All you have to do is use the blockchain “increase fee” feature.
How do blockchain miners get paid?
Blockchain miners get rewarded through cryptocurrency. In the networks, various miners are supposed to compete for the reward. There are principles to be followed to help a miner earn.
When a mathematical puzzle is brought up in a network, the first miner to get it right gets the reward. This goes by the rule of first come first serve. A miner then earns by the number of blocks a miner has acquired.
A transaction is validated when the majority of the members in the network agree.
Ways of validating transactions to get a reward :
- Proof-of-stake :
The miners and users in the network need to have shares of the cryptocurrency. That is a requirement for one to be able to select and validate transactions.
- Proof-of-work :
this is when the users in the network are supposed to complete a mathematical equation to add a block.
Who pays miners in blockchain?
In blockchain mining, there has been no proof of a definite party that pays the miners.
The currency and rewards are made out of the actions done. The common rates for paying miners are 50Bitcoins per block created. Theoretically, whenever a new block has been created and validated, the miner gets transaction fees which gives him or her profit.
Small portions of the money stated in the various transactions done by users in a network are also used in paying the miners.
It is also evident that the transaction cost is not inclusive of the total amount of money being transacted. The transaction cost is used to pay these miners. Indeed, the increasing value of bitcoin is where the money is compensated.
Is blockchain mining legal?
Blockchain mining is a legal business in most countries. This kind of mining is simply an online trading activity done on the blockchain platform.
The transactions and data are all kept in secure ledgers. The data is immutable thus nobody can tamper with the data by either changing or deleting it.
Some of the advantages of blockchain mining are:
- Securing networks
The security of the networks is increased by having more blockchain miners. The more the miners in a network, the more secure it is. Security and encryption in a network reduce fraud as well as penetration by outsiders.
- Verifying transactions
This is the process in which transactions have to be validated to get recorded in the ledgers. Every transaction comes with its block.
- Transaction confirmation
This is where transactions are confirmed to either be real or fake. If a transaction is legit, it is then recorded in the blockchain ledger and linked to the previous transaction.
How to become a blockchain miner
One can become a blockchain miner by joining a network where transactions are being done. Joining a network is accomplished by applying to join a blockchain network then installing a specific blockchain software that enables peers in the network to transact safely.
A ledger is downloaded after installing the special software that then makes you a full node blockchain miner.
When mining to earn, each block takes about 10 minutes to process and mine. Miners get rewarded approximately 6.25 bitcoin per block.
It is essential to note that not all members of a blockchain network are miners. Apart from the special software, special hardware produces considerable computing power for solving mathematical puzzles.
In a day, about 144 blocks are mined where each block has 6.25 bitcoin. Cryptography was used in developing blockchain to enhance security.
Blockchain is fast and efficient when the network is small and does not have many users within. Many users process transactions at the same time, slowing down the network that inconveniences the users.
When a user loses the special key that is provided when one joins a network, there are very low chances to recover it.
There are numerous opportunities in blockchain. It is up to you to decide what you would like to do using blockchain.