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Instead, they 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 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 similar to gold mining in the bitcoins exist in the protocols design (just as the gold is underground), but they havent been introduced into the mild yet (just as 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 cubes of confirmed transactions and including them in the blockchain.

Backtracking a little, lets talk about nodes. A node is a powerful computer which runs the bitcoin applications and helps to 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 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 they know, etc.. That way it ends up getting around the whole network fairly fast. .

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

(For trivia lovers, this number is called a nonce, which can be a concatenation of number employed 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 which makes it impossible to forecast exactly what the outcome will be. So, miners guess the mystery number and use the hash function to the combination of that guessed number and also the information in the block. The resulting hash must start with a pre-established number of zeroes.

Whats more, there may be several nonces that make the intended result, or there may be none (in the event the miners 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 remainder of the network. The rest of the miners immediately stop work on that block and start trying to find out the puzzle number for the next one. As a reward for the 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 nearly $200,000.

Though its not nearly as cushy a bargain as it sounds. There are a lot of mining nodes competing for this benefit, and it is a question of fortune and computing power (the more guessing calculations you can execute, the luckier you are).

Additionally, the expenses of being a mining node are considerable, not only because of the effective hardware needed (if 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 electricity 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, however, it halves every four decades or so (the next one is expected in 2020-21). The worth of bitcoin relative to cost of electricity and hardware could extend up over the next few decades to partially compensate this reduction, but its you can try here not certain. .

The problem of the calculation (the required number of zeroes at the beginning of the hash string) is corrected frequently, so that it requires on average approximately 10 minutes to process a block.

Why 10 minutes That is the amount of time that the bitcoin programmers think is necessary to get a continuous and diminishing flow of new coins until the highest number of 21 million has been reached (anticipated some time in 2140).