This article explains Bitcoin mining in details, right down to the hex data and network traffic. If you’ve ever wondered what really happens in Bitcoin mining, you’ve come to the right place. I manually created a Bitcoin transaction bitcoin mining nonce increment sent it into the system. In this article, I show what happens next: how a transaction gets mined into a block.
Bitcoin mining is often thought of as the way to create new bitcoins. But that’s really just a secondary purpose. The primary importance of mining is to ensure that all participants have a consistent view of the Bitcoin data. Because Bitcoin is a distributed peer-to-peer system, there is no central database that keeps track of who owns bitcoins. Instead, the log of all transactions is distributed across the network.
The main problem with a distributed transaction log is how to avoid inconsistencies that could allow someone to spend the same bitcoins twice. 10 minutes, which makes them official. Conflicting or invalid transactions aren’t allowed into a block, so the double spend problem is avoided. Although mining transactions into blocks avoid double-spending, it raises new problems: What stops people from randomly mining blocks? How do you decide who gets to mine a block?