What is Mining?
Broadly, mining serves three purposes:
1. To verify the legitimacy of transactions;
2. To secure the network and stop so-called double-spending; and
3. To add new digital currencies to existing circulation by rewarding miners for performing the previous tasks.
Mining can be carried out by Individuals, or collectives. Mining computers collect pending bitcoin transactions (a “block”) and turn them into a mathematical puzzle. The first miner to find the solution announces it to others on the network. The other miners then cross-check the verified transactions and whether the solution to the puzzle is correct.
If enough of them grant their approval, the block is cryptographically added to the ledger and the miners move on to the next set of transactions (hence the term “blockchain”). The miner who found the solution gets 12.5 bitcoins as a reward, but only after another 99 blocks have been added to the ledger. All this gives miners an incentive to participate and validate transactions.