Bitcoin is one of the most volatile digital currencies that is catching wind nowadays, one can imagine the popularity of bitcoin by the fact that various popular business tycoons like Amazon, Microsoft, Starbucks have introduced bitcoin as the latest mode of payment for every customer.
Bitcoin mining is the core of the entire bitcoin network, if you’re planning to invest in bitcoin wallet app development then it is essential to know the basics of bitcoin mining. So let’s begin and understand the process of Bitcoin mining from tip to toe.
What is Bitcoin mining?
Bitcoin mining verifies the authenticity of the blockchain protocol, there are miners that process every bitcoin transaction and records them in the public blockchain ledger. Bitcoin mining is crucial for their transaction process because there is no centralized institution (a bank, or government) to verify it.
Let’s dive in to understand the mechanism of this process.
Why do we need bitcoin mining software?
The process of bitcoin mining works on a challenging mathematical puzzle known as proof of work. The proof of work validates the transaction and helps the miners in earning rewards.
Miners compete against each other for mining any of the specific transactions, if a miner solves the puzzle before other miners then he gets the reward, and the transaction gets added to the blockchain. However, to join the blockchain network, you will need bitcoin mining software.
Any network participant having sufficient computing power and required hardware to validate the transactions can be a miner. A bitcoin mining software makes the mining task easier and also assists in earning rewards. If you need in-depth reports and analysis of your earnings then a bitcoin mining application can be a worthwhile companion.
Types of Bitcoin Wallets
Mining is important for the future of bitcoin and blockchain networks. Seemingly, various mining apps make this process easier. However, before investing in bitcoin wallet app development, it is important to know about the types of bitcoin wallet solutions that are available in the market.
Mobile wallets are significant to those users that use bitcoin regularly, they look similar to a smartphone application that stores private keys and comes with the features of making payments for things, trading, and storing cryptocurrencies
Some of the mobile wallets also use the NFC feature that comes in every smartphone nowadays. This feature allows mobile wallets to operate small subsets of the blockchain just by making a simple tap instead of sharing any information.
Web wallets are also known as online wallets, as the name sounds; these wallets use a web browser for further accessibility. Experts never prefer to store cryptocurrencies in online wallets because they are prone to cyber threats and hackers keep on spying over them. However, they’re the fastest mode of transactions and also provide storage for different types of cryptocurrencies.
Desktop wallets as the name suggests, these wallets require installation on a computer and use a hard drive or SSD for the storage of private keys. Consequently, they’re more secure and accessible ways of storing cryptocurrencies than mobile and web wallets.
These wallets don’t rely on any third party and they store bitcoins offline. However, they still use the internet which makes them prone to cyber-attacks. If you’re looking to target users that deal in small amounts of bitcoins then these wallets are the best investment option.
Bitcoin mining Software Development Features
Before planning to hire a Blockchain Development Company, let’s read about the features that your mining software should have.
- A blockchain software must provide real-time statistics of every miner.
- It should be able to do hash-rate monitoring and check out the profitable GPUs that are available in the market.
- Look for a mining profitability calculator that provides data of the best GPUs meant for a certain mining rig. Your software should be able to calculate profits according to the inputs of graphic cards and electricity prices.
- A bitcoin mining software should mine even when in an idle state, many cryptocurrency mining software provides this feature with the name of ‘idle mining’.
- It doesn’t matter how brilliant your software is, if its user interface is not friendly then it is of no use for anyone. Therefore, always hire UI designers that have strong expertise.
- Many of the mining software work on similar algorithms that fail to derive strong analysis. If your software has the feature to customize its algorithms then it can improve the mining performance to a greater extent.
- Blockchain software should provide multiple payment options without relying on a single mode of payment because, in this digital age, every user expects versatility.
How Does Bitcoin Mining Software Development Work?
As we know that bitcoins are free from the centralization of government regulation which means we need some assets to ensure validation of transactions and these assets are called miners.
Before diving into the mining mechanism, it is important to understand these concepts of blockchain.
- Public distributed ledger: It is a database of all transactions validated in the blockchain network across multiple sites, countries, or institutions.
- SHA-256: It is a set of hash functions that ensures the safety of a blockchain from hackers and other cyber attacks. Here, the input string remains variable but it always generates a fixed 256-bit output.
- Proof of work: It is a mechanism that requires miners to validate transactions by solving arbitrary mathematical puzzles. After solving the mathematical puzzle, the miner verifies the transaction by adding it to the blockchain.
Let’s look into the following example to understand how bitcoin mining software works.
Suppose, Ramesh wants to share 5 bitcoins with Suresh. Firstly, the memory pool will share this transaction request with all miners. A memory pool is a database for unconfirmed transactions that aren’t verified and added to the blockchain by any user. Bitcoin miners will use proof of work and compete against each other to complete the validation of this transaction. Then, the first miner to solve the puzzle will share the result among other nodes.
After the verification of block and generation of a nonce, the nodes will start approving the block. If the block receives maximum approval from the nodes then it will become valid, the algorithm will add it to the blockchain and the miner will be awarded.
Now, the 5 bitcoins from Ramesh to Suresh will be transferred successfully.
Process Panel of Bitcoin Mining Software Development
In the previous section, we read about the mechanism of mining software. Let’s proceed further to know about the process panel of a BlockChain Development Company.
Selecting a relevant blockchain technology
Blockchain mining software development can be done on various technologies like Hyperledger, Ethereum, Stellar, Corda, EOS, and a lot more. Therefore, proceed with a technology that can enhance your mining solution.
Decentralized application development
It is not easier to find developers with expertise in App development. Hence, before finalizing the Hire Bitcoin mining Software Development team. Look for their previous projects and client testimonials.
Contract development is a time-consuming task. Therefore, look for a contract development team that can provide effective contracts for any blockchain network, for example- crowdfunding contract, App contract, etc.
A bitcoin mining software needs to be hack-proof, robust, and should be able to provide an efficient real-time currency exchange on both iOS and Android platforms.
Human errors are inevitable, that’s why software testing plays an important role in the blockchain software development cycle. It refines the quality of software and ensures better usability and functionality.
Roadmap to start bitcoin mining:
Although it is a very complex and daunting task, bitcoin mining is profitable. Here are the following steps that you need to know before starting bitcoin mining:
- Analyze profits: Investment in crypto mining includes hardware and electricity cost. Whereas, the profit totally varies on the bitcoin’s value in the market.
- Invest in reliable hardware: ASICs (application-specific integrated circuits) is professional mining hardware that costs from hundreds of dollars to $10,000. They consume a great amount of electricity that’s why electricity is also included in mining expenses.
- Go for mining software: After setting up the hardware, we’ll need mining software to communicate with your machine. It’ll help you access the blockchain and manage your earnings.
- Get a bitcoin wallet: A wallet will help you to store the bitcoins. We’ve already read about types of crypto wallets in the previous section. Therefore install a bitcoin wallet according to your preference.
- Look for a mining pool: There are a lot of mining pools available in the blockchain, look for a mining pool that fits your working strategy.
After completing the above steps, be ready to start mining. However, always make routine checks over hardware and other equipment to prevent any mishap.