The new trend of today’s economy is Bitcoins. This virtual currency if accepted by the government might take the place of our traditional paper money. But one thought that hits a layman’s mind is how do I earn these bitcoins? There are two ways of earning Bitcoin. The first method is very simple where you can exchange your paper money with Bitcoins. The current rate of exchange of Bitcoin in 1 Bitcoin is equals to $365 US dollars. The second and really complex method is Bitcoin mining. Now, is mining for Bitcoins just like mining for gold? The answer is yes and no. Yes because in gold mining you need to be very lucky as the amount of gold mined depends on the place where you are mining it. Similarly in Bitcoin mining you need to be very lucky to find the correct “nonce” for your hash tag. And, no because gold mining is mining in literal sense where you need man power and a piece of land to extract the gold but in Bitcoin mining you need very powerful GPUs and an expert knowledge in cryptology.
Nonce, cryptology, hash tags, algorithms to make money? Sounds very confusing? Trust me, when I learned about it, I was also really shocked and confused. Over the Bitcoin network people are exchanging Bitcoins all the time. Keeping a track of these transactions is important to know who paid whom what and how much. The Bitcoin network collects all these transactions made during a set of time and makes a list called block. This is where a miner comes into picture where he authenticates these transactions and writes them into a general ledger. These entire set of general ledgers makes a long list of blocks which are called Block chains. Any set of new transactions are added to this block chain. A miner applies a mathematical formula on these block chains and turn them into a random sequence of numbers and letters which are called hash. It is very easy to produce a hash and a high end GPU can produce many hash tags in a single seconds. If it is so easy why the bitcoin network will pay bitcoins for each hash produced. To make this process more difficult and complicated the bitcoin network has introduced something called “proof of work.” The Bitcoin network will not accept a hash unless it has a certain number of zeros in the beginning. Miners cannot change the transactions in the block and hence can add a piece of data called “nonce.” Every time the nonce changes the hash also changes, therefore to create the perfect hash you need to have that particular nonce.
So the most efficient chip maker will make the most number of hash and hence maximum number of Bitcoins. As per a recent press conference in Daejong, South Korea, Mr. Peter Vessenes, chairman of Bitcoin foundation stated that “Samsung will be biggest beneficiary of the bitcoin market.” He also added that the logic behind this conclusion is that “With Samsung Electronics being already one of the most prominent chipmakers in the world, it’s no surprise that he would come to this conclusion.”