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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 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. But 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 (just as the gold is underground), but they havent been introduced into the mild 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 this as a reward for creating cubes of validated transactions and including them in the blockchain.
Backtracking a bit, lets talk about nodes. A node is a powerful computer which runs the bitcoin applications and assists to keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin applications (free) and leave a certain port open (the downside 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 which it knows, who will relay the information to nodes that they know, etc.. That way it ends up getting around the entire network fairly quickly. .
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 so by solving a intricate mathematical puzzle 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 cube and passed through a hash function, creates a result that is within a certain range.
(For trivia lovers, this number is known as 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.)
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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 use 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 may be several nonces that make the desired result, or there might 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 success to the remainder of the network. The rest of the miners immediately stop work on that block and begin trying to figure out the puzzle number for the next one. As a reward for its work, the victorious miner has some new bitcoin. .
In the time of writing, the payoff is 12.5 bitcoins, which at time of writing is 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 that benefit, and it is a question of luck and computing power (the more guessing calculations you can perform, the luckier you're ).
And, the number of all bitcoins awarded as a reward for solving the puzzle will decrease. Its 12.5 now, however, it pits each four years important site or so (the next one is anticipated in 2020-21). The value of bitcoin relative to price of power and hardware could go up during the next few decades to partially compensate this reduction, but its not certain. .
The problem of this calculation (the required number of zeroes at the beginning of the hash string) is adjusted frequently, so it takes on average approximately 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 maximum number of 21 million has been reached (anticipated some time in 2140).