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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 2 million transactions per day. In 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 from the ground. But bitcoin isnt physical, so why do we call it mining
Since its similar to gold mining in that the bitcoins exist in the protocols design (just as the gold is underground), but they havent been brought out into the mild yet (like the golden hasnt yet been dug up). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.
They get to perform this as a reward for creating blocks of confirmed transactions and including them in the blockchain.
Backtracking a bit, lets talk about nodes. A node is a powerful computer that runs the bitcoin software and assists keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin software (totally free ) and leave a certain port open (the drawback is 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 fast. .
Some nodes are mining nodes (usually known as miners). These group outstanding transactions into cubes and add them to the blockchain. How can they do so by solving a intricate mathematical puzzle that's part of this bitcoin program, and including the answer in the block. The puzzle that needs solving is to find a number that, when combined with the data in the block and passed via a hash function, produces a result that's within a certain range.
(For fiction fans, this number is known as a nonce, which is a concatenation of number employed once. In the instance of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)
How do they find this number By guessing at random. The hash function which makes it impossible to predict what the output will be. So, miners guess the mystery number and apply the hash function to the combination of the guessed number and the data in the cube. The resulting hash has to start with a pre-established number of zeroes.
Whats more, there might be several nonces that produce the intended result, or there may be none (in which case the miners keep trying, but with a different block configuration). .
The first miner to acquire a resulting hash within the desired range announces its victory to the remainder of the network. All the other miners immediately stop work on that block and start trying to figure out the mystery number for the next one. As a reward for its work, the victorious miner has some new bitcoin. .
In the time of writing, the payoff is 12.5 bitcoins, which in time of writing is worth almost $200,000.
Although its not nearly as cushy a deal as it sounds. There are a lot of mining nodes competing for this reward, and it is a question of fortune and computing power (the further guessing article source calculations you can perform, the luckier you are).
Additionally, the expenses of being a mining node are considerable, not only due to the effective hardware needed (in case you've got a faster processor than your competitors, you've got a better chance of finding the correct number before they do), but also due to the large amounts of electricity that running these chips consumes. .
And, the number of all bitcoins given as a reward for solving the puzzle will decrease. Its 12.5 now, but it halves every four years or so (the next one is anticipated in 2020-21). The value of bitcoin relative to price of power and hardware could go up over the next few years to partially compensate this reduction, but its not certain. .
The problem of this calculation (the required number of zeroes at the beginning of the hash string) is corrected frequently, so it requires on average about 10 minutes to process a block.
Why 10 minutes that's the amount of time that the bitcoin developers think is necessary for a continuous and diminishing flow of new coins until the maximum number of 21 million has been reached (anticipated some time in 2140).