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Instead, they went with Solution 2. The resulting currency, known as bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification procedure to permit a performance of around two million transactions per day. At the time of writing, Bitcoin Cash is valued at $545.00 to Bitcoins $6,328.11.

When you hear bitcoin mining, you envisage coins being dug out of the ground. However, bitcoin isnt physical, so why do we call it mining

Because its similar to gold mining in that the bitcoins exist in the protocols design (just as the gold exists underground), but they havent been brought out into the mild yet (like the gold hasnt yet been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.

They get to do so as a reward for creating cubes of confirmed transactions and including them in the blockchain.

Backtracking a bit, lets discuss nodes. A node is a powerful computer which runs the bitcoin software and helps to keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin applications (totally free ) and also leave a certain port open (the drawback is the fact that it consumes energy and storage space the network at time of writing carries up about 145GB).

One node will send information to some nodes that it knows, who will relay the information to nodes that they know, etc.. That way it ends up getting around the whole network pretty quickly. .

Some nodes are mining nodes (usually referred to as miners). These set outstanding transactions into cubes and add them into the blockchain. How do they do this By solving a complex mathematical mystery that is part of the bitcoin program, and including the answer in the block. The puzzle that needs solving is to find a number that, when combined with the information in the cube and passed via a hash function, produces a result that is within a certain range.

(For trivia lovers, this number is known as a nonce, which can be a concatenation of number used once. In the instance of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

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How can they find this number By guessing at random. The hash function makes it impossible to predict what the output will be. So, miners guess the puzzle number and apply the hash function to click for more info the combination of the guessed number and the data in the cube. The resulting hash has to begin with a pre-established number of zeroes.

Whats more, there may be several nonces that make the desired result, or there might be none (in the event the miners keep trying, but with a different block configuration). .

The first miner to get a resulting hash within the desirable range announces its success to the rest of the network. All the other miners immediately cease work on that block and begin trying to figure out the puzzle number for the next one. As a reward for its work, the victorious miner has some new bitcoin. .

In the time of writing, the reward is 12.5 bitcoins, which at time of writing will be worth nearly $200,000.

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Though i thought about this its not nearly as cushy a bargain as it sounds. There are a whole lot of mining nodes competing for this reward, and it's a question of luck and computing power (the further guessing calculations you can execute, the luckier you're ).

Also, the expenses of being a mining node are considerable, not only due to the powerful hardware needed (if you have a faster processor than your opponents, you have see page a better chance of finding the correct number before they perform ), but also due to the large amounts of electricity that running these processors consumes. .

And, the number of bitcoins awarded as a reward for solving the mystery will decrease. Its 12.5 now, however, it pits each four decades or so (the next one is expected in 2020-21). The value of bitcoin relative to cost of power and hardware could extend up over the next few years to partially compensate this reduction, but its not certain. .

The difficulty of the calculation (the required number of zeroes at the beginning of the hash string) is adjusted frequently, so it takes on average about 10 minutes to process a block.

Why 10 minutes That is the amount of time that the bitcoin developers think is necessary for a steady and diminishing flow of new coins until the maximum number of 21 million is attained (anticipated some time in 2140).