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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 allow 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 bitcoin mining, you envisage coins being dug from 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 is underground), but they havent been introduced 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 so as a reward for creating blocks of confirmed transactions and including them in the blockchain.
Backtracking a bit, lets discuss nodes. A node is a powerful computer that runs the bitcoin applications and assists keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin software (free) and 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 which 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 referred to as miners). These group outstanding transactions into cubes and add them into the blockchain. How can they do this By solving a complex mathematical mystery that's a portion of this bitcoin program, and including the answer in the block. The puzzle that needs solving is to find a number that, when combined with the data in the block and passed via a hash function, creates a result that is within a certain range.
How can they find this number By guessing at random. The hash function which makes it impossible to predict exactly what the output will be. So, miners suppose the mystery number and apply the hash function to the combination of the guessed number and the information in the block. The resulting hash has to start with a pre-established number of zeroes.
Whats more, there might be several nonces that produce the intended result, or there may be none (in which case the miners keep trying, but using a different block configuration). .
The first miner to get a resulting hash within the desirable range announces its victory to the rest of the network. All the other miners immediately stop work on that block and begin 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. .
In the time of writing, the payoff is 12.5 bitcoins, which at time of writing will be worth almost $200,000.
Additionally, the expenses of being a mining node are considerable, not only due to the effective hardware needed (if you have a faster processor than your competitors, you have a better chance of finding the correct number before they perform ), but also due to the large amounts of power 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, however, it halves every four years or so (the next one is expected in 2020-21). The value of bitcoin relative to recommended you read cost of electricity and hardware could go up over the next few years 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 adjusted frequently, so it requires on average approximately 10 minutes to process a block.
Why 10 minutes that's the amount of time that the bitcoin developers think is necessary for a steady and diminishing flow of new coins until the maximum number of 21 million has been attained (anticipated some time in 2140).