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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 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 about 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 that the bitcoins exist in the protocols design (like the gold exists underground), but they havent been brought out into the light yet (just as the gold hasnt been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.

They get to do so as a reward for creating blocks of validated transactions and including them in the blockchain.

Backtracking a little, lets talk about 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 simply download the bitcoin software (free) and also leave a certain port open (the downside 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 they know, etc.. That way it ends up getting around the whole network pretty fast. .

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

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(For fiction fans, this number is called 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.)

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 apply the hash function to the combination of the guessed number look at these guys and also the information in the cube. 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 keep trying, but with a different block configuration). .

The first miner to get a resulting hash within the desirable range announces its victory 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 your next one. As a reward for the own work, the victorious miner has some new bitcoin. .

In the time of writing, the reward is 12.5 bitcoins, which in time of writing will be worth nearly $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 that reward, and it's a question of fortune and computing power (the more guessing calculations you can perform, the luckier you're ).

Also, the expenses of being a mining node are considerable, not only due to the effective hardware needed (if you've got a faster processor than your competitors, you have a better chance of finding the right number before they perform ), but also because of the large amounts of electricity that running these processors consumes. .

And, the number of bitcoins awarded as a reward for solving the puzzle will decrease. Its 12.5 now, but it halves every four decades or so (the next one is expected in 2020-21). The worth of bitcoin relative to price of power and hardware could extend up over the next few decades to partially 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 adjusted frequently, so go to the website it takes on average about 10 minutes to process a block.

Why 10 minutes That is the amount of time that the bitcoin programmers think is necessary for a steady and diminishing flow of new coins until the maximum number of 21 million is attained (expected some time in 2140).

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