Bitcoin Data Mining

Bitcoin Data Mining
• Bitcoin mining refers to the process of authenticating and
adding transactional records to the public ledger. The public
ledge is known as the blockchain because it comprises a chain
of the block.
• Before we understand the Bitcoin mining concept, we should
understand what Bitcoin is. Bitcoin is virtual money having
some value, and its value is not static, it varies according to
time. There is no Bitcoin regulatory body that regulates the
Bitcoin transactions.

• Let's understand the bitcoin concept with an example. The
company manager takes a dummy thing and announces that
who will get this thing will be the happiest employer of the
organization and get an international holiday ticket. So
everyone trying to buy that dummy thing that has no value and
in this way, this dummy thing will have some value may be lies
between 10$ to 20$ or anything. We can relate these things
with the Bitcoin if the number of purchasers of Bitcoin
increases, then the value of Bitcoin also increases to a
saturated value afterward it stops.

• Bitcoin was created under the pseudonym(False
name) Satoshi Nakamoto, who announced the invention, and
later it was implemented as open-source code. An only end-to-
end version of electronic money would enable online payments
to be sent directly from one person to another without the
interference of an economic body.Bitcoin is a network practice
that empowers people to transfer assets rights on account units
called Bitcoin's, made in limited quantity. When an individual
sends a couple of bitcoins to another individual, this data is
communicated to the peer-to-peer bitcoin network.

• This technology remains similar to purchasing something with virtual
currency. However, one advantage of Bitcoins is that the
arrangement remains unidentified. The personal identity of the
sender and the beneficiary (receiver) remain encrypted. It is the
primary reason that's why it has become a trusted form of money
transaction on the web. By convention, the complexity in making
distributed money is the requirement for a proposal to avoid double-
spending. One individual may simultaneously transmit two
transactions, sending similar coins to two distinct parties on the
network. Bitcoin settles this difficulty and ensures agreement of
rights by keeping up a community ledger of all transactions, called
the blockchain. New transactions are grouped mutually and are
checked against the existing record to make sure all new
communications are valid. Bitcoin's accuracy is ensured by
individuals who give computation authority to its system known as
miners to validate and affix transactions to a public ledger.

• Bitcoins don't exist physically and are only an arrangement of
virtual data. It can be exchanged for genuine money, and are
broadly acceptable in most countries around the globe. There is
no central authority for Bitcoins, similar to a central bank(RBI in
India) that controls the monetary policy. Alternatively,
developers solve complex puzzles to support Bitcoin
transactions. This process is called Bitcoin mining.

How to Mine Bitcoins:
• It is quite a complex process, but if you want to take it directly, then here is the
process of how it works. You need to get a CPU(Central Processing Unit) with
excellent processing power and a speedy web interface. In the next step, there
are numerous online networks that list out the latest Bitcoin transactions taking
place in real-time. Afterward, Sign in with a Bitcoin customer and attempt to
approve those transactions by assessing blocks of data, called hash. Now,
communication goes through several systems, called nodes, which are simply
blocks of data, and since the data is encoded, a miner is needed to check if his
answers are accurate.
• It is quite a complex process, but if you want to take it directly, then here is the
process of how it works. You need to get a CPU(Central Processing Unit) with
excellent processing power and a speedy web interface. In the next step, there
are numerous online networks that list out the latest Bitcoin transactions taking
place in real-time. Afterward, Sign in with a Bitcoin customer and attempt to
approve those transactions by assessing blocks of data, called hash. Now,
communication goes through several systems, called nodes, which are simply
blocks of data, and since the data is encoded, a miner is needed to check if his
answers are accurate.

How the Bitcoin Mining Works:
• Bitcoin Mining requires a task that is exceptionally tricky to
perform, but simple to verify. It uses cryptography, with a hash
function called double SHA-256( a one-way function that
converts a text of any dimension into a string of 256 bits). A
hash accepts a portion of data as input and reduces it down into
a smaller hash value (256 bits). With a cryptographic hash,
there is no other option to get a hash value we want without
attempting a ton of sources. Once we find an input that gives
the value we want, it is a simple task for anybody to validate the
hash. So, cryptographic hashing turns into a decent method to
apply the Bitcoin "Proof-of-work" (data that is complex to
produce but easy for others to verify).

• If we consider a block to mine first, we need to collect the new
transactions into a block, and then we hash the block to form a
256-bit block hash value. When the hash initiates with sufficient
zeros, the block has been successfully mined and is directed to
the Bitcoin network, and that has turned into the identifier for the
block. In many cases, the hash is not successful, so we need to
alter the block to some extent and try again and again.

Bitcoin Transaction:
• A Bitcoin transaction is a section of data that is transmitted to
the network and, if valid, it ends up in a block in the blockchain.
The concept of a Bitcoin transaction is to transfer the
responsibility of an amount of Bitcoin address.
• When we send Bitcoin, an individual data structure, namely a
Bitcoin transaction, is made by your wallet customer and
afterward communicate to rebroadcast the transaction. If the
operation is valid, nodes will incorporate it in the block they are
mining, within 10-20 minutes, the transaction will be included,
along with other transactions, in a block in the blockchain.
Finally, the receiver can see the transaction amount in their
wallet.

Some facts about transactions:
• The Bitcoin amount that we send is always sent to a particular
address.
• The Bitcoin amount we get is locked to the receiving address,
which is associated with our wallet.
• Every time we spend Bitcoin, the amount we spend will
consistently come from funds received earlier and currently
present in our wallet.
• Addresses receive Bitcoin, but they don?t send Bitcoin, it is sent
from a wallet.

Bitcoin Wallets:
• Bitcoin wallets compile the private keys through which we access a
bitcoin address and payout our funds. They appear in different forms,
designed for specific types of devices. We can even use hardcopy to
store data to avoid having them on the computer. It is important to
secure and back up our Bitcoin wallet. Bitcoins are the latest
technology of cash, and very soon, other merchants start accepting
them as payment.
• We know how a bitcoin transaction mechanism works and how they
are created, but how they are stored? We store money in a physical
wallet, and bitcoin works similarly, except it is generally digital. In
brief, we don't need to stock bitcoins anywhere. What we store are
the secured digital keys used to access our public bitcoin address
and sign transactions.
• There are mainly five types of wallet that are given below:

Desktop Wallets:
• First, we need to install the original bitcoin customer (Bitcoin
Core). If we have already installed, then we are running a
wallet, but may not know it. In addition to depend on
transactions on the network, this software also empowers us to
create a bitcoin address for transfer and getting the virtual
currency. MultiBit(Bitcoin wallet) runs on Mac OSX, Windows,
and Linux. Hive is an OS X- based wallet with some particular
features, including an application store that associates directly
to bitcoin services.

Mobile Wallets:
• An application on our cell phone, the wallet can store up the security
key for our bitcoin addresses, and enable us to pay for things
straightforwardly with our phone. Many times, a bitcoin wallet will
even take advantage of a cell phone?s near-field
communication(NFC) aspect, empowering us to tap the mobile
phone against a reader and pay bitcoins without entering any data at
all. A bitcoin customer has to download the whole bitcoin blockchain,
which is always developing and is multiple gigabytes in size. A ton of
mobile phones wouldn't be able to hold the blockchain in their
memory. In such a case, they can use alternative options, and these
mobile users are repeatedly designed with simplified payment
verification (SPV) in mind. They download a confined subset of the
blockchain and depend on other trusted nodes in the bitcoin system
to ensure that they have the precise data. Mycelium is the example
of mobile wallets that comprises of the Android-based Bitcoin wallet.

Online Wallets:
• Electronic wallets stores our security keys on the web, on a
computer, limited by someone else and coupled to the Internet.
Various online services are accessible, and the network to
mobile and desktop wallets copying our address among various
devices that we own. One significant advantage of online
wallets is that we can access them from anywhere, in spite of
which device we are using.

Hardware Wallets:
• Hardware wallets are incomplete numbers. These are sharp
devices that can hold private keys electronically and make easy
payments. The compact Ledger USB bitcoin Wallet utilizes
smartcard protection and is accessible at a reasonable cost.

Paper Wallets:
• The cheapest alternative for keeping our bitcoins safe and
sound is significantly called a paper wallet. There are various
sites offering paper bitcoin wallet services. They deliver a
bitcoin address for us and generate an image containing two
QR codes. The first one is the public address that we can use to
receive bitcoins, and the other is the private key that we use to
pay out bitcoins stored at the address. The primary advantage
of a paper wallet is that the private keys are not stored digitally
anyplace, so it secures our wallet from cyber attacks.