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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 every 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 out of the ground. But bitcoin isnt bodily, 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 exists underground), but they havent been brought out into the mild yet (just as the gold 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 cubes of validated transactions and including them in the blockchain.
Backtracking a bit, lets talk about 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 software (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 takes 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 whole network fairly fast. .
Some nodes are mining nodes (usually referred to as miners). These group outstanding transactions into cubes and add them to the blockchain. How do they do this By solving a intricate mathematical mystery that's a portion of the bitcoin app, and including the answer in the block. The puzzle that needs solving is to find a number which, when combined with the data in the block and passed via a hash function, creates 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 case 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 makes it impossible to forecast what the output will be. So, miners guess the mystery number and use the hash function to the combination of the guessed number and the information in the cube. The resulting hash must begin with a pre-established number of zeroes.
Whats more, there may be several nonces that make the intended result, or there might be none (in the event the miners keep trying, but with a different block configuration). .
The first miner to get visit the site a resulting hash within the desired range announces its success 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 the own work, the victorious miner gets some new bitcoin. .
At the time of writing, the reward is 12.5 bitcoins, which at time of writing will be worth nearly $200,000.
Although its not nearly as cushy a bargain as it sounds. There are a whole lot of mining nodes competing for that reward, and it is a question of luck and computing power (the further guessing calculations you can execute, the luckier you are).
Also, 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've got a better chance of finding the right 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 mystery will decrease. Its 12.5 now, but it halves every four decades or so (the next one is expected in 2020-21). The value of bitcoin relative to cost of electricity and hardware could go up over the next few years to partly compensate this reduction, but its not certain. helpful site .
The problem of this calculation (the necessary number of zeroes at the beginning of the hash string) is adjusted frequently, so that it requires 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 to get a continuous and diminishing flow of new coins until the highest number of 21 million has been reached (anticipated some time in 2140).