What is Bitcoin Mining ? How Does BTC Mining Work ?

Bitcoin Mining is the process through which the Bitcoin transactions will be validated or verified. This could be done by anyone who has processing power for computation (like a computer or dedicated hardware for mining).

Each transaction will have some transaction fee depending upon the transacted amount. Many transactions are put into a block and it is validated by miners. Whoever validates the block first, that miner will get the total fee of all transactions as a reward for mining the block successfully.

Then, that block is added to the Blockchain ledger. This process will continue and blocks will be mined and added to Blockchain.

Mining Rigs

In order to mine a block, a miner has to solve the cryptographic puzzle (finding a hash below the target) and that miner has to be the first one to solve the puzzle. This is known as Proof of Work (PoW).

So, one must possess enormous capacity of computational processing power and must be extremely lucky for successfully mining a BTC Block !

As we know the bitcoins hold a high market value in Cryptocurrency domain, the competition among miners to mine the block is extremely high.

Some facts about mining :

• Dedicated hardware with heavy computation power has been introduced just for the sake of bitcoin mining. These are called as Mining Rigs
• Mining concept is fundamentally based on Cryptography.
• Bitcoin Mining requires extensive computational power and electricity. Majority of the bitcoins are being mined in China.
• As of now,  for every 10 minutes, a new block is being mined and added to the bitcoin ledger blockchain.

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Who is Satoshi Nakamoto ? The Man Behind Bitcoin !

Nobody knows the real identity of Satoshi Nakamoto !

It was the username/alias of the leading member(or members) of online community which developed the first crypto currency – BITCOIN. Satoshi Nakamoto is the founder of Bitcoin. 

Some facts of Satoshi Nakamoto:

• The fundamental constituent of bitcoin in terms of currency value is Satoshi.

For Dollars $ -- cents
 For Bitcoins -- Satoshi

• It is unclear whether satoshi nakamoto is a single person or a group of persons.

• Satoshi Nakamoto is author of the first paper on Bitcoin.

• Satoshi Nakamoto developed the first Blockchain database.

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What is a BlockChain ? Block Chain Technology Explained !

Block + Chain  = A Chain of Blocks 

Blockchain is a continuous chain of blocks which are linked together sequentially. For understanding purpose consider the trains. All the bogies are blocks and the train itself is the blockchain. Just like the bogies of train are connected to one another, all the blocks are linked with a Hash. Biggest use-case of a blockchain is with Cryptocurrency / Bitcoin.

In every block, there will be some fields which hold respective data corresponding to the field. 

Fields in a Block:

1. Index
2. Time Stamp
3. Previous Hash
4. Hash
5. Data

If a new block is to be added to the chain, then it must hold the hash value of the last added block in the chain. Then this new block's hash value is copied to the next new block that will be added to the chain after some time.

A new block is added to the existing chain only if a miner validates that block using a process called Mining. Anyone on the internet can do mining and earn bitcoins (BTC). (Know more about the Mining process in this article)

In Computer Science field, this is familiar and follows the same principle of a Linked List Data Structure. 

A Blockchain is decentralized, which means there won’t be any governing authority which can hold ultimate rights over the data. Everybody on the Internet can look up the data in the Blockchain whenever they want. 

Blockchain acts as a distributed ledger for Bitcoin transactions. 

The concept was first introduced by Satoshi Nakamoto. Know more details about this mysterious man in next post.

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You might also be interested in Other Technologies Bechind Bitcoin / Cryptocurrency 

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What is CryptoCurrency ? Everything you need to know about Crypto, Blockchain and Trading.

 What is Cryptocurrency?

Cryptocurrency is a virtual form of money which cannot exist physically. All the transactions can happen only on the internet. Users will have a wallet in which the crypto coins are stored securely and users can transfer or receive coins through peer to peer mechanism (without any mediator in between). All they transactions are registered on a digital ledger called Blockchain.

Generally, the money related transactions are made through banks acting as mediators between sender and receiver. There is no such system in Cryptocurrency transactions. They follow a Peer to Peer mechanism of protocol. 

Cryptocurrency is Decentralized system, which means all the users have complete rights over their data. 

The most popular and first cryptocurrency that came into existence is Bitcoin (Know more about Bitcoin here)

But what exactly is the use of cryptocurrency?

The most popular reason is that the transactions are anonymous. We can’t know the personal details of sender or receiver of bitcoins. Only things which are visible to everyone on the block chain are: Public keys, transaction amount and transaction ID.

How do the Cryptocurrencies come into existence ?

All the coins (including Bitcoins / btc or other ALT Coins) are created by Mining. (Check this article for more about Mining)

Sounds confusing? Don’t worry it will be explained in later articles. Just keep gaining the knowledge. Jump to next post.

Go to next post – What is a BlockChain?

Trading with Cryptocurrencies. Top Trading Platforms for Bitcoins & ALT Coins

Do you want to know about the methods to start earning passive income through Cryptocurrency ?

Do you want to exchange your Bitcoins into rising ALT Coins or Stable Coins ?

Or do you simply want to buy some crypto with normal FIAT currency? 

Your answer for all the above questions is same - Trading Platforms for Crypto !

There are many coin exchange platforms that have been introduced since the roar of BTC Price in recent years. We can sign up to those websites free of cost and start investing or exchanging between the numerous coin pairs in the market.

NOTE: This is not Financial Advice. This is just for the purpose providing information !!

The following are some good Crypto Trading Platforms:

 1) Binance

• Binance is almost unanimously the most used and top rated trading platform available as of now.
• Binance has its own coin offering BNB
• Huge number of binance users contribute to good circulating supply in all coins.
• Staking is available and on some coins/tokens.

Visit Website - https://www.binance.com/en

2) MXC

• Mxc is also widely used (not as popular as Binance though).
• This website offers some rare and newly introduced coins for trading.
• Provides good Graphical User Interface for Visualization of graphs and market trends. 
• Staking available for some coins/tokens.

Visit Website - https://www.mxc.com/

3) CoinBase

• If you are beginner and you only want to start it simple with only the popular coins, then Coinbase might suit you. 
• Limited and only wide known coins are offered for exchanging. 
• Simple Interface. Mobile app available.
• Advanced traders would not use coinbase much.

Visit Website - https://www.coinbase.com/

4) WazirX (Especially for India)

• WazirX is a great platform for Indian users because it offers trading in INR directly. Conversion charges can be avoided for Indian users. 
• WazirX is a part of Binance and can transfer your assets between these two.
• Staking not available.

Visit Website - https://wazirx.com/

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What is BitCoin ? Everything You Need To Know About BitCoins

BITCOIN -The origin of a new era in Digital Currency / CryptoCurrency !

Bitcoins are a form of virtual currency or CryptoCurrency which possess a high market value as of now. This is a new form of exchange transactions without the necessity of physical coins or notes. Everything is virtual and decentralized.

Unlike normal FIAT currency, we don't need a mediator or governing authority (like bank) for approving the transactions. Instead, all the bitcoin transactions are validated by Miners and every transaction details are stored in a distributed ledger called BlockChain.

This concept was first proposed and implemented by the mysterious Satoshi Nakamoto. (Know more about Satoshi Nakamoto here)

Bitcoin Logo (Source : Wikipedia)

This Blockchain ledger is distributed / decentralized, in the sense : anyone on the internet can look up the ledger and its transactions at any time. This blockchain is stored in many computers (called Nodes in Bitcoin jargon) and it is fault tolerant with the help of an efficient consensus protocol.

New Bitcoins are generated through a process called Mining.

Bitcoins can be used for online transactions and Trading. In recent times, many people have been earning passive income with bitcoins and it has become quite lucrative ! 

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How to Earn Money with Cryptocurrency & Bitcoins

Earning money with Bitcoins and ALT Coins has become quite popular in recent years and many people are making significant amount of passive income thorough this field.

The following are the ways you can earn some income using Cyrptocurrencies.

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1) Trading

Trading is the most popular way to earn money using Cryptocurrency. There are many exchange platforms where you can buy or sell coins with FIAT currency or exchange directly with other crypto coins or tokens.

See this Post for detailed overview of these Trading Platforms

NOTE : This is not any financial or Trading advice, This is just for informative purpose.

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2) Mining 

Through Mining, we can directly earn coins without any trading platform. If a miner validates any block successfully, then the reward of that block is paid to the miner. then that can be exchanged into normal FIAT currency or it can be loaded to any trading platform for exchanging to other coins.

Mining can be of 2 types:

Individual Mining - A sole person or any individual will mine in their house with a simple mining rig or a Graphics Processing hardware and tries to validate the blocks of respective Blockchains.

This is very inefficient because it is highly impossible to mine a block with such little computation processing power.

Mining Pools - Many Individual miners/users combine together and form a pool and try to find the value of SHA 256 Hash that falls below the target.

Mining pool services are offered by some websites. Users can sign up and start mining. The work will be distributed among all the individual miners.

If someone in the pool finds the required hash meaning that the block has been mined successfully, then the reward will be split to all users in the pool prportionately to the processing power they contributed to the pool.

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3) Other Ways

• Giveaways by newly introduced coins or token projects
• Offers on trading Platforms as loyalty reward programs

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Go to Next Post - Trading with Cryptocurrency & BTC

Go to Previous Post - SHA 256 Algorithm in BTC Mining

SHA 256 Algorithm usage in Bitcoin Mining

SHA stands for Secure Hash Algorithm. 256 represents the number of bits of size in memory occupied by a hash generated by SHA 256 Algorithm.

SHA 256 is a hash function in Cryptography field that is used in Mining of Bitcoins.

The output of hash function will be a sting of 64 characters long. All the characters are hexadecimal.

Not only in Cryptocurrency field, SHA 256 can be used in many other use cases for uniquely identifying any document or file  or any text.

The hash value will be same for same files or same text every time we use them.

5 Attributes of Secure Hash Algorithm:

One Way - Using the output Hash, we couldn't generate the original text.

Deterministic - Same hash should be generated for same original text everytime.

Fast Computation - Hash should be generated very swiftly without time delay

Avalance Effect - Even the slightest change in original input text should result in drastic change in output hash.

Must Withstand Collisions - Same hash should not be generated for two different inputs.

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Consensus Protocol for Blockchains in Cryptocurrency

Blockchain of every Cryptocurrency should be distributed in nature with the help of a consensus protocol. Even though it is distributed across thousands of computers all over the world, a Blockchain is immutable.

If an attacker tries to change the data of any existing block in the ledger, then that block's "hash" value (generated by SHA 256 Algorithm) will change. Then, this new hash will not match with the next block's "previous hash" field. So, now the attacker needs to change this block also and this process will continue till all the subsequent blocks are manipulated successfully. 

Even if the attacker successfully changed the data of blockchain, since there are thousands of copies of original blockchian around the internet, this fake blockchain will not be valid because of the Majority Rule.

Majority Rule - Whichever copy is found more number of times, then that copy of blockchain is considered to be original and valid.

So, the attacker can't achieve anything by simply modifying one or two copies of blockchain, atleast 51% of copies of blockchains needs to be modified simultaneously with same fake data all over the world. Then only the hackers can corrupt the blockchain. But this task can be considered as impossible in real world practicality. 

Consider these 2 Scenarios:

Scenario - 1:

If an attacker adds a block exactly after the current last block in Blockchain.

If attacker entered fake/malicious transactions in the block and mined it successfully, then this block will not be added to chain because before adding any block to the chain, a series of checks are performed for validating the block.

More than 20 checks are performed on each new block before adding and copying it to all the blockchains in the distributed network.

Scenario - 2:

What if 2 blocks are mined exactly at the same time and both are valid blocks.

In this case, both the blocks are copied to the copies of blockchains which are geographically nearer in the network. So one block is copied into its nearest blockchains and other block is added to its nearest copies of blockchains. This means 2 versions of Blockchains will exist and both of the versions are Valid and original. 

Both the  versions of chains will wait for the next new block to be mined and whichever version gets the new block then it is copied all over the distributed network. So, the longest chain will be valid and the previous block in the other version will be cancelled. Those transactions needs to be validated again in a new block and it has to be mined again.

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What is Cryptography and its usage for Cryptocurrency ?

Cryptography is the science of keeping data secure from unwanted or untrusted entities. Main goal of cryptography is to make a public open channel into a virtual secure channel such that it satisfies the following 3 properties:

1. Privacy
2. Authenticity
3. Integrity

Cryptographic mechanisms can vaguely be divided into two types: 

1. Symmetric Key Cryptography
2. Asymmetric Key Cryptography.

In Cryptocurrencies, Asymmetric Key Cryptography is used. So, we will try to understand that in this post.
Asymmetrical cryptography follows Public Key Mechanism meaning that - one key is publicly displayed and it is sharable to anyone. However the Private key should be kept secret. (Know more about private keys and how to store securely in this article)

Some attributes of Asymmetric Key Cryptography:

• Public Key Cryptography
• One key will be in public domain and the other will be Private
• Different Keys are present on both Parties (sender and receiver)
• No need of prior key agreement
• Computationally a little bit heavier.

In Blockchain, all the blocks are linked cryptographically. For every block, a hash is generated using SHA 256 Algorithm. Then, that hash is stored in that block and copied to next new block as well. In this way every block will contain two hashes : one is its own hash and other one is that of previous block.

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Go to Previous Post - Technologies behind BTC & Cryptocurrency

Technologies behind Bitcoin and Cryptocurrency

There are many concepts that enable the successful working of Bitcoin and Alt Coins over the years. The following are fundamental technologies that contribute to Cryptocurrency domain.

1) BlockChain

Blockchain acts a record of ledger for all the transactions in the network. Think of a Blockchain as a database for storing all of the transactions occurred and will occur in the future.

Know more about the Blockchain technology in this post

2) Cryptography

Cryptography deals with the security aspects in the networking domain. It aims to protect the data that is being communicating over the network (generally Internet) so that, no outsider can understand the data except for the intended receiver. Cryptography is a demanding field in Computer Science.

Know more about Cryptography in this article...

3) Distributed / Decentralized

In every cryptocurrency, the underlying blockchain is distributed. It means the same blockchain is copied and distributed to many computers all over the globe. All of the Blockchains have same data. If anyone tries to change data then it will be detected because there are several copies of blockchain and we can know which is the valid blockchain.

Know more about this Consensus Protocol here

4) Peer 2 Peer

A Peer 2 Peer (also known as P2P) is decentralized application architecture in which all the users can interact or perform the required use case directly with each other. There will be no governing authority that facilitates the interaction or provides the approval. The users in the P2P network will have the full rights. Main aim is to avoid the mediator / intermediate authority or any 3rd party.

Examples are uTorrent, Bittorrent, Bitcoin Transactions...etc.

5) SHA 256 Algorithm

• S - Secure
• H- Hash
• A - Algorithm

SHA 256 is a Cryptographic Hash Function that converts any given input into a string of 64 random Hexa-Decimal characters. These 64 characters take 256 bits of size to store in memory. Hence, the name SHA 256.

Know more about the SHA 256 Algorithm here

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What are Stable Coins in Cryptocurrency ?

Stable Coins - Aims to Keep their Value Stable

Stable coins are a class of Cryptocurrencies whose goal is to keep the price or market value of exchange rate as stable as possible. The implementors of stable coins achieve this by fixing the price of a stable coin to an external factor like Price of Dollar or Price of Gold etc.

Cryptocurrency markets are highly volatile and the values of any coin may crash and sink to bottom or the value may increase and sky-rocket up to the moon. The market is unpredictable.

So, there is a need for a fixed value coins that don't undergo these type of unpredictable changes. Stable coins came into existence to fulfill this need.

Bitcoin is not a stable coin !!

Each Stable coin has its own Blockchain and all the transactions of that respective coin will get recorded in that Decentralized ledger.

Some of the popular & widely used Stable coins:

1) Tether
2) Paxos Standard Token
3) DAI
4) USD Coin
5) True USD
6) Reserve

and many more... Detailed posts on each of the stable coins will be updated soon... bookmark this page or remember this site (jvermaDLL.blogspot.com) for insights on cryptocurrencies for beginners.

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What are ALT Coins in Cryptocurrencies ?

ALT Coins (Alternative coins for Bitcoin)

After the establishment of Bitcoin, a new variety and numerous coins of Cryptocurrencies came into existence. These all have individual names but all of them are collectively called as Altcoins.

Alt coins are relatively much cheaper in value when compared to BTC. This provides good agility in trading markets so that investors can easily buy and sell coins in less amounts of value.

Altcoins - All coins other than Bitcoin

Each coin in altcoins will have its own Blockchain which acts as a ledger for storing all the transactions of that coin by all users.

There are currently more than 5000+ Cryptocurrencies / altcoins as of now !

Some popular and widely used Alt coins are:

(Click on the each Coin for detailed post on that coin...)

1) Ethereum

2) Tether

3) Ripple

4) Tron

5) Litecoin

6) Dash Coin

7) Bitcoin Cash

8) Atom

and many more... Detailed posts on each of the altcoins will be updated soon... bookmark this page or remember this site (jvermaDLL.blogspot.com) for insights on cryptocurrencies for beginners.

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List of Best Hardware Wallets for Storing Bitcoins / BTC / Cryptocurrency.

The following are some of the best Hardware wallets or Cold Wallets available for storing Bitcoins or any other Cryptocurrency (Also known as ALT Coins).

1) Ledger Nano X 

• Size - 72mm x 18.6mm x 11.75mm
• Weight - 34g
• Connector - USB Type-C
• Box Contents - 1 hardware wallet, 1 USB cable, 1 getting started leaflet, 3 recovery sheets, 1 keychain strap.

Visit Website : Ledger Nano X

2) Tezor

• Available in 2 models - Tezor One & Tezor Model T
• Good Customer Support. Simple and Intuitive GUI.
• Tezor model T comes with touch screen functionality.

Visit Website: Tezor

3) Cold Card

• Only for Bitcoins. Low Cost
• Bright, 128x64 pixel OLED screen.
• Full-sized numeric keypad makes entering PIN easy and quick.

Visit Website: Cold Card

4) BitBox

• Supports more than 1000+ Cryptocurrencies
• OLED Display, Invisible Touch Sensors.
• USB type - C, Micro SD Card Back up.

Visit Website: BitBox

5) OPOLO

• Supports 120+ Popular coins
• Easy recovery process

Visit Website: Opolo

6) Cobo Vault

• 4-inch Touchscreen, Detachable Battery
• Self-Destruct Mechanism, Fingerprint Authentication

Visit Website : Cobo Vault

You might be interested in - List of Best Software Wallets 

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Got to post - What are Crypto Wallets ?

What are Bitcoin Wallets ? How to Store Cryptocurrency in Digital Wallets ?

As you may have guessed already, Bitcoin wallets are storage locations for your Public and Private keys. These keys are the proof that you actually own the amount of Bitcoins that exist on the decentralised Blockchain of respective Cryptocurrency

Public Key is used if someone wants to send you BTC. You will provide your public address to the sender and then the sender sends the bitcoins to your address.

Private Key is used if you want to send your BTC to other person's address. NEVER REVEAL YOUR PRIVATE KEYS TO ANYONE !! As the name indicates, they are private and nobody should have access to your private keys except you.

If your private keys are compromised, then anyone can steal you bitcoins belonging to that address.

Bitcoin Wallets are specially designed to store your keys and only you can have access to them.

There are types of wallets for cryptocurrency :

Virtual Wallets / Software Wallets:

These type of crypto wallets are online. We can sign up for wallet providing services (websites or apps) and they will create a wallet for us. Although it is safe to use virtual crypto wallets, these are considered to be less secure when compared to Hardware wallets.

Check out the list of top Software Wallets available 

You will be given a sentence of 12 words which helps you to recover your access incase you forgot/lost your password or credentials.

Hardware Wallets:

These are dedicated physical devices which are designed to store Cryptographical Keys. Hardware Wallets have strong encryption mechanisms which ensure top level security for your keys.

Check out the list of best Hardware wallets available for purchasing

Hardware wallets typically come in the form of a pendrive shaped devices.

Hardware Wallets

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List of Best Software Wallets for Bitcoin - Store BTC in Virtual Wallets.

The following are the most popular Software Wallets or Hot Wallets for storing Bitcoins securely.

1) Exodus

Best hot wallet for storing Cryptocurrencies. Available in both mobile and desktop versions.

Website : Visit Exodus

2) Coinbase

Another most popular Wallet available is coinbase

Website : Visit Coin Base

3) Trust Wallet

Trust wallet is also widely popular

Website : Visit Trust Wallet

4) Nexo Wallet

In nexo, we can stake some cryptocurrencies and interest can be earned. 

Website : Visit Nexo

These are just few in list and will be updating with complete list soon...

You might be interested in - List of Best Hardware Wallets

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