Why is mining necessary?
The process of mining gold can be understood as it is a mineral found deep underground that can only be reached and salvaged using mining equipment. But can the same be said for something that only exists on computers?
While the term ‘mining’ relating to items found on a digital platform can be a bit confusing to grasp, you can think of Bitcoin miners as the ‘bank tellers’ of the blockchain network, collectively ensuring all the information is correct before adding a transaction to the network. The miner who solves the mathematical problem presented as part of the consensus protocol can then add their block to the chain and claim his or her reward of brand new Bitcoin that has now been successfully ‘mined’.
Thus miners are incentivised to work together to validate each set of new transactions ensuring they are legitimate in order to eventually earn a reward. Without them, the blockchain would have no way of preventing fraud or verifying transactions as legitimate. In this way, miners help create a secure network. They also protect against a problem inherent in any digital currency: double spending.
What is Double-Spending?
Put simply, double-spending is the risk that a digital currency can be spent twice, either by mistake or intentionally. It’s a problem unique to digital currencies over traditional physical currencies as digital information can potentially be re-created easily by wrongdoers who understand the blockchain network and have the means to manipulate it. If a currency user, Bill, decided to give a £5 note to his mate Ben, would Ben be able to tell if this note was a forgery? Probably. But in the digital world, this becomes a bit more tricky.
While in the physical world, the process of finding the equipment and orchestrators of counterfeiting is regularly carried out to keep the likelihood of this activity down, you can easily create a perfect copy of a file digitally with no way of knowing which file is the original.
To fix this, Bitcoin’s public ledger or the blockchain ensures that any fraudulent transactions can be identified easily and, with the help of miners, the fraudulent attempt is blocked. Therefore miners and the process of mining is an essential function to ensure the blockchain and its transactions remain secure.