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Instead, they went with Solution 2. The resulting currency, called bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification process to permit a performance of around two 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 the bitcoins exist in the protocols design (like the gold is underground), but they havent been brought out into the light yet (like the gold hasnt yet been awakened ). 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 validated 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 assists to keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin software (free) and also 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 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 referred to as miners). These group outstanding transactions into blocks and add them into the blockchain. How do they do so by solving a complex mathematical mystery that's a portion of the bitcoin program, and including the answer in the cube. The mystery that needs solving is to find a number that, when combined with all the information in the cube and passed through a hash function, produces a result that is within a certain range.

 

 

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(For trivia lovers, this number is called a nonce, which can be 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 makes it impossible to predict what the outcome will be. So, miners suppose the puzzle number and use the hash function to the combination of the guessed number and the data in the block. The resulting hash must start 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 the event the miners directory keep trying, but with a different block configuration). .

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

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

 

 

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Although its not nearly as cushy a bargain as it sounds. There are a lot of mining nodes competing for this reward, and it is a question of luck and computing power (the further guessing calculations you can perform, the luckier you're ).

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 all bitcoins given as a reward for solving the puzzle will decrease. Its 12.5 now, however, it pits each four years or so (the next one is expected in 2020-21). The worth of bitcoin relative to price of power and hardware could go up over the next few decades to partly 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 corrected frequently, so it takes on average approximately 10 minutes to process a block.

Why 10 minutes that's the find this amount of time the bitcoin programmers think is necessary to get a continuous and diminishing flow of new coins until the maximum number of 21 million is attained (anticipated some time in 2140).

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