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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 process to allow a performance of around 2 million transactions per day. At 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 from the ground. However, bitcoin isnt physical, so why do we call it mining

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

They get to do this as a reward for creating cubes of confirmed transactions and including them in the blockchain.

Backtracking a bit, 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 just download the bitcoin software (free) and 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, who 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 referred to as miners). These group outstanding transactions into cubes and add them into the blockchain. How do they do this By solving a intricate mathematical mystery 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 data in the cube and passed via a hash function, creates a result that's within a certain range.

(For fiction fans, this number is called a nonce, which can be a concatenation of number employed once. In the instance of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

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How do they find this number By guessing at random. The hash function makes it impossible to predict exactly what the outcome 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 begin 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 desired range announces its victory to the remainder of the network. The rest of the miners immediately cease work on that block and start trying to figure 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 almost $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 this benefit, and it is a question of fortune 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 because of the effective hardware needed (if you've got a faster processor than your competitors, directory you've got a better chance of finding the right number before they do), but also due to the large amounts of electricity that running these chips consumes. .

And, the number of bitcoins given 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 power and hardware could go up during the next few years to partly compensate this reduction, but its not certain. .

The difficulty of this calculation (the required number of zeroes at the beginning of the hash string) is corrected frequently, so it takes on average about 10 minutes to process a block.

Why 10 minutes that's the amount of time that the bitcoin programmers think is necessary for a steady and diminishing flow of new coins until the highest number of 21 million browse around this site is attained (anticipated some time in 2140).