We have spoken about Bitcoin miners many times in previous articles. They help secure the network in exchange for block rewards in Bitcoin.
How does this work?
The Bitcoin blockchain is a distributed ledger of transactions. Nodes all around the world keep a copy of this ledger and update it roughly every ten minutes when a new block of transactions is confirmed.
Bitcoin miners are the entities that confirm each new block of transactions. Bitcoin runs on a proof of work algorithm. This means that in order for miners to get a piece of the block rewards for any new block they must solve a mathematical formula faster than other miners to the validate transactions. This is all done using mining machines like an ASIC.
Bitcoin miners are able to get an upper hand over other miners when they can devote more computational power to their mining operation. The hash rate measures the aggregate power miners devote to solving Bitcoin’s proof of work algorithm. A higher hash rate means increased competition among miners for block rewards.
As hash rate increases within the network, the more secure it becomes because it means there is more computational power to validate transactions and will be more expensive for bad actors to attack it. Higher the hash rate, the more secure Bitcoin’s underlying technology becomes.
As you can see in the chart, Bitcoin’s hash rate has been on a steady increase since inception. When Satoshi first made Bitcoin public it was susceptible to a 51% attack, meaning bad actors could take over more than half of the network and have the ability to alter transactions. However, now thousands of Bitcoin nodes and miners exist all over the world with infrastructure dedicated to preserving the Bitcoin network. 51% attacks are virtually impossible in the current state of the network.
Look at the hash rate from the last bull run in 2017 and how much it has grown since then. It is undeniable the growth of the network and the substantial increase in security.
Investors often say they don’t no how to value Bitcoin. That is because you cannot value it based on traditional practises. Its value derives from all the developers, node operators, and miners around the world that have independently put large amounts of money, time, and expertise into creating this incredible decentralized value creation network.
Let’s connect on Twitter. Looking forward to hearing your thoughts and feedback.
In the news…
Resources I Use
I use Glassnode for all the metrics I track on the Bitcoin network. Their platform is extremely user friendly and fun to use.
Binance is the main exchange to trade the crypto markets.
Trading Alpha has built their own indicators that provide buy and sell signals for crypto and equities trading.
I use Tradingview daily to analyze trading charts and find areas of support and resistance.
I learned how to trade through the Bulls on Wall Street program. I’m in this chat everyday giving out my trade ideas.
Nothing in this article is investment advice. I’m not a financial advisor. Do not make investment decisions based on what is in this article or any other article written by BTC News or Blockedia.