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The importance of Bitcoin mining as laid out by Satoshi Nakamoto

By now, you probably know what Bitcoin mining is. The Bitcoin mining industry took off in the past two years, with companies selling crypto mining equipment mining billions. And while you know that Bitcoin mining can make you some money, are you aware of just how important the process is to the Bitcoin ecosystem?

In the physical world, when one party in a transaction pays the other using fiat currency, the second party is certain that the currency received belongs to him/her alone. In the digital world, duplicating a unit of currency is quite easy. Satoshi Nakamoto was well aware that this challenge, known as double spending, would be stumbling block to the use of Bitcoin.

This is why miners are some of the most important stakeholders in the Bitcoin ecosystem. A miner checks for two things when you initiate a transaction. The first is to confirm that you are the recipient of an input by checking the digital signatures. The second is to confirm that you’ve not spent the input elsewhere which would amount to double spending by checking the public Bitcoin SV blockchain.

Miners are therefore integral members of the Bitcoin ecosystem. They keep the network secure, preventing the occurrence of a 51% attack. This is an attack in which a group of miners would control over 50% of the network’s mining hash rate or computing power. In such a scenario, the miners would have the ability to double spend as they could reverse their transactions on the blockchain. With Bitcoin having thousands of miners spread across the world, it’s nearly impossible for it to succumb to such an attack. Smaller cryptos have, however, been the victims of such attacks.

Whenever a block is successfully verified, the miners receive a reward for their mining efforts. The block reward halves every four years. This is the only way in which new Bitcoins are generated. To ensure that the miners are even more incentivized to carry out their tasks, Satoshi designed the ecosystem for them to receive the fees that users in the network pay. This ensures that the transactions are increasingly fast and that the miners continue to secure the network.