Bitcoin Mining is a software development process that starts with the creation of a digital currency and mining a limited number of new coins, securing the network and distributing newly created currency among users who helped with the discovery and the mining process. In this article, I am discussing bitcoin mining from the standpoint of an electrical engineer.
The notion of mining Bitcoins took off in 2012 when programmers devised a new way to create them, one which they believed would reduce the risk of theft from miners and make the system more efficient and reliable. These new coins were termed “BTC” or “BTC-E.”
But the Bitcoin network was not quite as secure as its developers hoped, and an attack was able to take advantage of a gap in the software that can be exploited. The unauthorised user can then access transactions and then change or cancel them.
The flaws have been fixed by a group of computer programmers who sold their discovery to a company that secures bitcoin wallets. The group has incorporated the software in bitcoin wallets for Android phones. A spokesman said the software remained vulnerable to attack by someone with a bitcoin mining botnet, a network of devices infected with malicious software.
With today’s price, bitcoins are now a hot commodity. In the past, it was difficult for bitcoin investors to mine bitcoins and the total number of bitcoins in circulation was limited to 21 million.
As a result, there has been a surge in investment and trading. The value of all bitcoins in existence is worth more than US$25 billion.
In Singapore, we do not have laws prohibiting the use of bitcoins, but the Federal Reserve has issued some advice on how to protect yourself from bitcoin scams.
• It is recommended that you exercise due caution when considering investments in bitcoins. A bitcoin is worth an essentially infinite number of dollars and this means that when you buy them, you do not buy a physical asset with a finite value.
• This makes bitcoins a highly speculative asset. You should invest only as much money as you are willing to lose and you should know that there is always a risk of losing your money.
• Scammers can create schemes to get you to invest in bitcoins. They can contact you via a company website, social media or even by phoning you. Once they find out that you invested in bitcoins, they will try to persuade you to transfer your bitcoins to their account.