Bitcoin is a unique digital currency. Unlike every other kind of digital currency, Bitcoin is not managed by one central institution. Bitcoin is instead managed by individuals who set up servers to conduct Bitcoin transactions. The people who setup servers for Bitcoin transactions are called Bitcoin miners. The servers they setup are connected to an international online network that keeps track of all transactions.
No Bitcoins without Bitcoin Mining
Traditional paper money is printed out and distributed by Governments. There is no Government for Bitcoins, so Bitcoin miners serve as the unregulated Government for Bitcoins. Bitcoins are generated when Bitcoin math problems are solved. Bitcoin miners use special software to solve these problems, and they are rewarded with a set number of coins every time they solve a problem.
The creator of Bitcoins knew that if the math problems that needed to be solved to generate coins were simply, or stayed the same after they were solved, people would abuse the system and Bitcoins would not be relevant. The Bitcoin system is designed so that the math problems get harder the more it is mined. This is why it is important for people to use good Bitcoin mining hardware if they want to make a profit. Good hardware is also important because miners are responsible for approving transactions. Due to the fact that miners are responsible for approving transactions and maintaining the Bitcoin system, the more miners there are, the more secure the system is.
The Effects of Good Bitcoin Mining Hardware
In order for a person to understand the importance of good Bitcoin mining hardware, they first have to understand the history of Bitcoin mining. Once a person understands the history of Bitcoin mining, it is easy to understand why ASIC technology is the best thing to ever happen to the Bitcoin economy.
In the beginning of the Bitcoin economy, before Bitcoins because popular, Bitcoin miners use basic computer processors to mine for Bitcoins. Basic computer processors are designed to handle simple functions, so miners couldn’t solve advanced Bitcoin math problems using them. Bitcoins are generated whenever people solve Bitcoin math problems, so basic computer processors greatly limited the amount of Bitcoins that could be generated for the Bitcoin economy.
After Bitcoin miners got tired of the limits of basic computer processors for solving Bitcoin math problems, they switched to gaming graphic cards for solving them. Gaming graphic cards are much better at solving Bitcoin math problems than regular computer processors, but they generate a lot of electricity, which creates a lot of heat. The heat generated by gaming graphics cards made them impractical to use for Bitcoin mining for an extended period of time.
Enter ASIC Bitcoin Mining Hardware
If the Bitcoin community had to rely on basic computer processors, and gaming graphics cards to generate Bitcoins, the community would not be able to strive. To solve this problem, the company Butterfly Labs Inc., has created Bitcoin mining hardware that uses application-specific integrated chips to do Bitcoin mining. These chips are called ASIC for short, and they are specifically designed to complete the toughest Bitcoin mining math problems, and they do not require a lot of power to run. Due to the fact that these chips do not require a lot of power to run, people can leave them running as long as they want to, and they will not crash. Bitcoin mining hardware that uses ASIC provides the Bitcoin economy with the stability it needs to become an international stable currency.
Maintaining the Future of Bitcoins
The use of ASIC Bitcoin mining hardware is important because if people cannot trust the Bitcoin system, it cannot become a global system. At this very moment, a Bitcoin ATM is in the works. The ATM is called a Robocoin. This ATM will allow Bitcoin users to conduct transactions the same way they conduct transactions at traditional ATMs.
If the ATMs are successful, Bitcoins have the potential to become a standard currency. The only way these ATMs can be successful, is if miners use hardware that can successfully solve Bitcoin math problems, and does not have the potential for crashing. The mining equipment from Butterfly Labs is supposed to do this. If the equipment does this, people may be able to start using Bitcoins in place of paper money in the physical realm.