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How does blockchain technology work? Blockchain tech is actually rather easy to understand at its core. Blockchain tech offers a way to securely and efficiently create a tamper-proof log of sensitive activity (anything from international money transfers to shareholder records). Essentially, it’s a shared database populated with entries that must be confirmed and encrypted. Blockchain’s conceptual framework and underlying code is useful for a variety of financial processes because of the potential it has to give companies a secure, digital alternative to banking processes that are typically bureaucratic, time-consuming, paper-heavy, and expensive. Think of it as a kind of highly encrypted and verified shared Google Document, in which each entry in the sheet depends on a logical relationship to all its predecessors.
In 2009, a miner could mine 200 Bitcoin in a matter of days. Since its inception, Bitcoin has been rather volatile. But because so many miners have joined in the last few years, it remains difficult to mine loads. The solution is mining pools, groups of miners who band together and are paid relative to their share of the work. Super powerful computers called Application Specific Integrated Circuit, or ASIC, were developed specifically to mine Bitcoins.
And that work comes in the form of mining. But let’s take a step back. Every four years, the number of Bitcoins released in relation to the previous cycle gets reduced by 50%, along with the reward to miners for discovering new blocks. He (or they) reached that figure by calculating that people would discover, or “mine,” a certain number of blocks of transactions each day. Satoshi Nakamoto, the founder of Bitcoin, ensured that there would ever only be 21 million Bitcoins in existence. At the moment, that reward is 12.5 Bitcoins.