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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 procedure to permit 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. But bitcoin isnt physical, so why do we call it mining

Since its like gold mining in that the bitcoins exist in the protocols design (like the gold exists underground), but they havent been introduced into the light yet (just as the gold hasnt been dug up). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.

They get to perform so 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 that runs the bitcoin software and assists to keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply 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 takes up about 145GB).

One node will send information to some nodes that it knows, that will relay the information to nodes that they know, etc.. That way it ends up getting around the whole network fairly quickly. .

Some nodes are mining nodes (usually known as miners). These set outstanding transactions into blocks and add them into the blockchain. How can they do this By solving a complex mathematical mystery that is part of this bitcoin app, and including the answer in the block. The mystery that needs solving is to find a number which, when combined with all the information in the block 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 known as a nonce, which is a concatenation of number employed once. In the case of bitcoin, the nonce his explanation 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 suppose the mystery number and use the hash function to the combination of the guessed number and the information in the cube. The resulting hash has to begin with a pre-established number of zeroes.

Whats more, there might be several nonces that produce the intended result, or there might be none (in which case the miners keep trying, but using a different block configuration). .

The first miner to acquire a resulting hash within the desirable range announces its success to the remainder of the network. The rest of the 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 own work, the victorious miner gets some new bitcoin. .

In 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 whole lot of mining nodes competing for that reward, and it's a question of luck and computing power (the more guessing calculations you can execute, the luckier you're ).

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 perform ), but also because of the large amounts of power that running these processors consumes. .

And, the number of all bitcoins awarded as a reward for solving the puzzle will decrease. Its 12.5 now, but it pits each four years or so (the next one is anticipated in 2020-21). The value of bitcoin relative to cost of power and hardware could go up over the next few decades to partially compensate this my company reduction, but its not certain. .

The problem of the 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 10 minutes that's 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 (anticipated some time in 2140).

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