Bitcoin mining is the process by which transactions are verified and added to the public ledger, known as the block chain, and also the means through which new bitcoins are released.
The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. These processes are carried through by bitcoin miners and despite the myth not anybody can become a miner.
As he or she needs special hardware chips working constantly to solve the cryptographic puzzles that creates new blocks in the bitcoin ledger in exchange for the rights to newly created bitcoin.
Through this process the transaction data in each batch is encrypted by a formula that can be unlocked only through trial-and-error guessing on a massive scale. The miners put large-scale computing power to work as they compete to be the first to solve it. If a miner’s answer is verified by others, the data is added to a linked chain of blocks of data and the miner is rewarded with newly issued Bitcoin.
The bank transaction function is also performed by bitcoin miners who just like a bank if you make an online transfer verifies that you have the funds, subtracts that amount from one spot in a giant database it maintains of accounts and balances, and credits it in another.
Just like you’re trusting the bank to remove the right amount of money, and the bank is also making sure you can’t spend that money again. The blockchain is a database that performs those tracking functions but without the bank or any other central authority.