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Insteadthey 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 about bitcoin mining, you envisage coins being dug from 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 is underground), but they havent been brought out into the mild yet (just as 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 cubes of validated transactions and including them in the blockchain.

Backtracking a little, lets discuss nodes. A node is a powerful computer that runs the bitcoin software and helps 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 downside 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 a few nodes that it knows, that will relay the information to nodes they know, etc.. That way it ends up getting around the whole network pretty quickly. .

Some nodes are mining nodes (usually known as miners). These set outstanding transactions into cubes and add them into the blockchain. How can they do so by solving a complex mathematical puzzle that's part of this bitcoin program, and including the answer in the cube. The mystery that needs solving is to find a number which, when combined with all the data in the cube and passed through a hash function, creates a result that's within a certain range.

(For fiction fans, this number is known as a nonce, which is a concatenation of number used once. In the case of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

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How do they find this number By guessing at random. The hash function makes it impossible to forecast exactly what the outcome will be. So, miners suppose the puzzle number and use the hash function to the combination of that special info guessed number and the data in the cube. The resulting hash has to begin with a pre-established number of zeroes.

Whats more, there might be several nonces that make the desired 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 find out the mystery number for the next one. As a reward for the work, the victorious miner gets some new bitcoin. .

At the time of writing, the payoff is 12.5 bitcoins, which at time of writing will be worth my company nearly $200,000.

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Although its not nearly as cushy a deal as it sounds. There are a 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'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 processors consumes. .

And, the number of all 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 anticipated in 2020-21). The worth of bitcoin relative to price of electricity view publisher site and hardware could go up over the next few years to partially compensate this reduction, but its not certain. .

The difficulty of the calculation (the necessary number of zeroes at the beginning of the hash string) is corrected frequently, so it takes on average approximately 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 steady and diminishing flow of new coins until the highest number of 21 million is attained (expected some time in 2140).