Why do we need mining? Why do we need a mining pool?

Why do we need mining? Why do we need a mining pool?

Bitcoin mining is actually the process of completing tasks in the Bitcoin system to obtain accounting rights and thus obtain rewards. Because the process is similar to "mining for gold" in real life, many people call it mining.

Just like gold can be exchanged for food, Bitcoins obtained as rewards from Bitcoin mining can also be exchanged for cash. As more and more people participate in mining, they will find it increasingly difficult to obtain rewards. At the same time, more and more people are discovering that Bitcoin can be profitable, and more people are paying attention to it, and its value is also pushed up by everyone.

How Bitcoin Mining Works

By consuming the computing power of their own computers to process transaction information in the Bitcoin system, as more and more people and institutions join this decentralized mining, everyone finds that no one person or organization can monopolize the Bitcoin produced by mining. According to the system design, if any person or organization wants to monopolize the Bitcoin produced by mining, they must control more than half of the mining computers and equipment, that is, more than 51% of the Bitcoin network, but this is impossible to achieve. The income from mining comes from Bitcoin rewards and transaction fees.
In short, mining is the process of confirming transactions in the virtual currency system and recording transactions in new blocks. Only miners who have the right to record can receive virtual currency rewards.

Why Mining?

For example, in the Xunlei P2P decentralized download network, everyone can act as a node to upload and download data. In this way, even if the link to the download website is invalid, the file can still be downloaded. Many people believe that as long as it is a P2P download, the file will always exist on the Internet.
If Bitcoin is essentially a P2P ledger and everyone shares the accounting records, then why do we need miners? We have to pay miners fees and waste electricity. Isn't this a waste of resources? In fact, there is a misunderstanding here. A decentralized peer-to-peer network has a feature that every node is equal. Every node can leave and delete data on its own at any time, and shut down on its own. It is not obligatory to serve everyone, so many people are unwilling to keep p2p software running. Therefore, many times, some scarce resources may never be downloaded.

The mining reward mechanism of the Bitcoin system solves the problem that each node is equal and has no obligation to serve everyone, because as long as you pay resources and computer resources, you will get rewards from the system. The more you work, the more you get. The system runs automatically and no one can tamper with it. This is fair. Everyone can get benefits through their own efforts. This is the universal gravitation of interests to human beings, and it is also the original motivation for human beings to do something from beginning to end. Rewards have become a source of strength, constantly motivating more people to join in the construction and maintenance of this system. It is because of mining that there are a large number of miners to ensure that this system is immortal.

Why do we need a mining pool?

At the beginning, Bitcoin only needed simple mining software and computers with ordinary configurations to mine Bitcoin. However, as the price of Bitcoin continued to rise, more and more people joined the mining queue, and the computing power of the entire network continued to increase. It has become difficult for a single device to mine Bitcoin.
At this time, multiple miners joined together to establish a mining pool. Since the computing power of many miners is gathered, the greater the proportion of computing power in the mining pool, the higher the probability of grabbing the right to record, and the greater the probability of obtaining Bitcoin. The Bitcoin rewards generated by mining in the mining pool will be distributed according to the proportion of computing power contributed by each miner. Compared with individual mining, joining a mining pool can obtain more stable income.
At present, the BTC mining pools with larger computing power in the world are F2Pool, AntPool, and CoinIn. China accounts for more than 80% of the total network computing power. The ETH mining pools with larger computing power in China are Spark and Spider Mining Pool.
For miners, it is important to choose a safe, stable and well-serviced mining pool. Not only can they obtain higher mining rewards, but the supporting services of the mining pool can also help miners solve mining problems and become a powerful assistant for miners in mining.

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