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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 process to allow a performance of around 2 million transactions every 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
Since its similar to gold mining in the bitcoins exist in the protocols design (just as the gold is underground), but they havent been introduced into the mild yet (like the golden hasnt 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 cubes of confirmed transactions and including them in the blockchain.
Backtracking a bit, lets discuss nodes. A node is a powerful computer that runs the bitcoin applications 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 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 which it knows, that will relay the information to nodes they know, etc.. This way it ends up getting around the entire network fairly quickly. .
Some nodes are mining nodes (usually known as miners). These group outstanding transactions into cubes and add them to the blockchain. How do they do this By solving a complex mathematical mystery that's a portion of the bitcoin app, and including the answer in the block. The mystery that needs solving is to find a number that, when combined with the information in the block and passed through a hash function, produces a result that's within a certain range.
(For trivia lovers, this number is called 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 can they find this number By guessing at random. The hash function which makes it impossible to predict what the outcome will be. So, miners guess the mystery number and apply the hash function to the combination of the guessed number and also the information in the block. The resulting hash has to begin with a pre-established number of zeroes.
Whats more, there might be several nonces that produce 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 your next one. As a reward for its work, the victorious miner gets some new bitcoin. .
At the time of writing, the reward is 12.5 bitcoins, which in time of writing will be worth nearly $200,000.
Though its not nearly as cushy a deal as it sounds. There are a whole lot of mining nodes competing for that benefit, and it's a question of fortune and computing power (the more guessing calculations you can execute, the luckier you are).
Additionally, the costs of being a mining node are considerable, not only due to the effective hardware needed (if you have a faster processor than your opponents, you have a better chance of finding the right number before they perform ), but also due to the large amounts of electricity that running these processors consumes. .
And, the number of bitcoins given as a reward for solving the puzzle will decrease. Its 12.5 now, however, it pits each four decades or so (the next one is expected in 2020-21). The worth of bitcoin relative to cost of electricity and hardware could go up over the next few decades to partly compensate this reduction, but its not certain. .
The problem of this calculation (the necessary number of zeroes at the beginning of the hash string) is adjusted frequently, so it requires on average about 10 minutes to process a block.
Why More Info 10 minutes That is the amount of time the bitcoin programmers think is necessary to get a continuous and diminishing flow of new coins until the highest number of 21 million is attained (expected some time in 2140).