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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 permit 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

Because its like gold mining in the bitcoins exist in the protocols design (like the gold exists underground), but they havent been brought out into the light yet (like the golden 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 blocks of confirmed transactions and including them in the blockchain.

Backtracking a little, lets discuss 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 software (free) and leave a certain port open (the downside is the fact 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, that will relay the information to nodes they know, etc.. That way it ends up getting around the entire network pretty fast. .

Some nodes are mining nodes (usually known as miners). These set outstanding transactions into cubes and add them to the blockchain. How can they do this By solving a intricate mathematical mystery that is part of this bitcoin app, 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, creates a result that is within a certain range.

(For fiction fans, this number is called a nonce, which is a concatenation of number used once. In the instance of more 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 which makes it impossible to predict what the outcome will be. So, miners suppose the mystery number and apply the hash function to the combination of that guessed number and also the data 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 intended result, or there might be none (in which case the miners keep trying, but using a different block configuration). .

The first miner to acquire a resulting hash within the desirable range announces its success to the read what he said rest of the network. The rest of the miners immediately cease work on that block and begin trying to find out the puzzle number for the next one. As a reward for its own work, the victorious miner gets some new bitcoin. .

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

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Although its not nearly as cushy a deal as it sounds. There are a whole lot of mining nodes competing for that 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 due to the powerful hardware needed (if you've got a faster processor than your opponents, you've got a better chance of finding the correct number before they do), but also because of the large amounts of electricity that this content running these processors consumes. .

And, the number of bitcoins given as a reward for solving the mystery will decrease. Its 12.5 now, but it pits each four decades or so (the next one is anticipated in 2020-21). The worth of bitcoin relative to price of power and hardware could extend up during the next few years to partially compensate this reduction, but its not certain. .

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

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