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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 per day. In 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

Because its similar to gold mining in that the bitcoins exist in the protocols design (just as the gold exists underground), but they havent been introduced into the mild yet (like the gold hasnt been dug up). 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 little, lets talk about 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 simply download the bitcoin applications (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 that it knows, that will relay the information to nodes 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 group outstanding transactions into cubes and add them to the blockchain. How do they do this By solving a intricate mathematical puzzle that is part of this bitcoin app, and including the answer in the block. The puzzle that needs solving is to find a number which, when combined with the information in the block and passed via a hash function, produces a result that's within a certain range.

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(For trivia lovers, this number is called a nonce, which is a concatenation of number used 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 which makes it impossible to predict what the output will be. So, miners guess the mystery number and apply the hash function to the combination of that guessed number and also 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 make the desired result, or there read review might be none (in the event the miners keep trying, but using a different block configuration). .

The first miner to get a resulting hash within the desired 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 the next one. As a reward for the work, the victorious miner gets some new bitcoin. .

In the time of writing, the reward is 12.5 bitcoins, which in time of writing is worth nearly $200,000.

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Though its not nearly as cushy a bargain as it sounds. There are a lot of mining nodes competing for that benefit, and it's a question of fortune and computing power (the further 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 have a faster processor than your opponents, you've got 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 awarded as a reward for solving the puzzle will decrease. Its 12.5 now, but it halves every four years or so (the next one is expected in 2020-21). The value of bitcoin relative to price of electricity and hardware could go up over the next few years to partially compensate this reduction, but its not certain. .

The problem of the calculation (the required number of zeroes at the beginning of the hash string) is corrected frequently, so it requires 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 to get a steady and diminishing flow of new coins until the highest number of 21 million has been attained (anticipated some time in 2140).

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