Bitcoin Mining - can you buy or mine Bitcoins in Australia
Running software which verifies transactions on the bitcoin network, is euphemistically known as "mining." The process of validation is called mining, for there's a chance that while verifying transactions, your software may "mine" a new bitcoin "block" - and be rewarded for doing so. This is how new bitcoins are created - via the process of transactional verification. Rather ingenius.
Unlike fiat currency, which is normally created out of debt, Bitcoin (and other alternate crypto-currencies) are created threw this process known as "mining" - which is effectively the process of securing and validating the transactions on the network. A "proof-of-work" system developed by Bitcoin's creator, the pseudonym Satoshi Nakamoto, "mining" occurs on the transactional record of Bitcoin, called the blockchain. Each new block in the chain, is generated or "mined" on average, every 10 minutes - with the network self-adjusting an arbitrary "difficulty" value in order to keep that average at around 10 minutes per new block. As new hardware is added (and removed), the difficulty will adjust every 2016 blocks to accommodate the change in network computing power - always striving to keep new block generation to every 10 minutes.
When Bitcoin was first launched in late 2009, mining was done solely on computer CPUs, usually by themselves, or "solo-mining". After a while, some clever folks figured out a way to combine their solo mining and they grouped together into "mining pools" - where they would distribute the rewards amongst themselves. Software also evolved, and enterprising software engineers developed a way to distribute the hashing algorithm (sha256) which drives Bitcoin, onto high-end graphics cards. With their multitude of parallel processing cores (heretofore used for rendering fancy 3D graphics and the like) used to calculate hashes for the network - effectively repurposing expensive, dedicated graphics cards, into nothing more than massively parallel number crunchers - not even rendering a single frame of graphics, yet being pushed to (and often times beyond) their limits. Not only was hardware adopted and co-opted into roles other than what it was originally designed for - but the software and supporting platforms evolved as well - with other peer-to-peer models rising up to challenge some of the larger pooled systems of co-operating miners.
Mining Software History
Originally, the bitcoin client was used to mine coins via the host's CPU, enabled by a simple parameter passed to the program at startup (gen=1, or generate coins = true). As time went on, and as the software and hardware evolved, other miner-specific programs and even operating systems were created. Early on, the python-powered Phoenix kernel was very popular (and remains so, to this day) as was phatk, followed by phatk2. DiabloD3 miner was released for OSX-specific mining. Eventually, multi-gpu, FPGA, and now ASIC hardware has been released and developed for, and it seems the state of the art miner software is now ckoliva's cgminer. Those in the Butterfly Labs camp like to point to BFGminer, which seems to be a fork of cgminer. Lastly, there is Reaper.exe, which afaik is only for windows. Several versions of miner monitoring software packages have also been released. Github, github, github!!
Dedicated operating systems, such as Linuxcoin and BAMT, were released by enthusiastic early adopters. As the platforms and technologies matured, windows and java/web-based applications were developed, lowering the bar for entry. In 2013 enterprising hackers released video game software with mining trojan code included, and were able to mine a decent amount of coin before being noticed.
CPU - > GPU -> FPGA -> ASIC -> ?
The open-source community remains the driving force behind bitcoin, mining, and associated software and hardware platforms. Even so much, as having entirely open-sourced designed ASIC hardware, controllers and software, which, as of summer 2013, are currently under development. As we enter the summer of ASICs, with tens of thousands of Avalon ASIC chips being sold for the DIY-crowd, as well as for startups who are using the chips to create hardware, we are bound to see a blossoming of innovation with these brand-new technology.