Let’s first think about how new value enters the system. Back in 2008, Satoshi Nakamoto only created 50,000 Bitcoins to start the process. If you think about it, had he built all 21 million in the first place, the Bitcoin would be worthless, and the idea would have been dumb. Instead, Satoshi started with a moderate amount of Bitcoin creation. Yet, as the Bitcoin community grows, more and more value would be required for the system to be kept alive. There is a particular process that is needed for the system to be maintained; Satoshi has come up with the solution by creating a role.
This solution is not only solving one, but two issues; permanently validating transactions and adding new value into the existing system. The role is called “miner”. Miners can be individuals, or any Bitcoin citizen. However, over time, many large companies have been formed, such as Genesis Mining, AntPool, SlushPool, F2Pool, where you, as an individual, can join and rent their mining facilities. There are many other miners who over the years have created a pool, and many of them also offer to join these pools for certain reasons that I will discuss shortly.
NOTE: If you want to look at all miner pools exist currently, you can visit the following page: https://www.blockchain.com/pools
Here, you will see all pools, but you might see a large percentage of them or “Unknown”. This is not the company name of course but those miners are mining solving blocks or mining Bitcoins using TOR browser. Basically they don’t want to share with anyone who they are and where they are.
First, let me explain why they are called miners and what it is they do. They are called miners as the analogy has been used with gold or any other precious metal. They work together to create new value, similar to gold miners who are digging underground. However, Bitcoin miners are sealing each transaction into the ledger. Therefore, we could call miners, finalizers or authenticators. To get rewarded for such work, the miners receive Bitcoins, and this is how new value is added to the system. The miners validate, authenticate, certify, and finalize the transactions by specific processes. Once the miners have created a new block that is accepted by the citizens, the record of the transaction cannot be modified, making it a permanent information. This will also become irreversible.
Therefore, no one can ever challenge it or change it in the future. The miners are sealing the blocks, which in itself can take an enormous amount of computing power, assuring that they cannot be easily replicated. There are multiple methods that each miner may use for the validating processes. Some of the miners may use different software, even creating their own in-house made software to speed up the authentication process. However, it doesn’t matter what software they use, as all of their work will be checked. It starts when a miner begins to gather transactions that have been broadcasted on the network, and then starts checking those transactions, and eventually sealing those collections of transfers and operations into a new block. A miner receives Bitcoins as a reward for each sealed block that is added to the Blockchain.
