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Insteadthey went with Solution 2. The resulting currency, called bitcoin cash, 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 bitcoin mining, you envisage coins being dug from the ground. However, bitcoin isnt physical, so why do we call it mining

Because its similar to gold mining in 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 gold hasnt yet 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 little, lets discuss nodes. A node is a powerful computer which runs the bitcoin applications and assists 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 that it knows, who will relay the information to nodes they know, etc.. This way it ends up getting around the whole network pretty quickly. .

Some nodes are mining nodes (usually referred to as miners). These set outstanding transactions into cubes and add them into the blockchain. How do they do so by solving a intricate mathematical puzzle that is a portion of this bitcoin program, and including the answer in the block. The puzzle that needs solving is to find a number which, when combined with all the information in the block Recommended Reading and passed through a hash function, creates a result that's within a certain range.

(For fiction fans, this number is known as 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 which makes it impossible to forecast exactly what the outcome will be. So, miners suppose the puzzle number and apply the hash function to the combination of the guessed number and the data in the block. The resulting hash must begin with a pre-established number of zeroes.

Whats more, there might be several nonces that produce the desired result, or there may be none (in which case the miners keep trying, but with a different block configuration). .

The first miner to acquire a resulting hash within the desirable range announces its success to the remainder of the network. All the other miners immediately cease work on that have a peek at this site block and start trying to find out the puzzle number for your next one. As a reward for the own work, the victorious miner has some new bitcoin. .

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

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Although its not nearly as cushy a bargain as it sounds. There are a check lot of mining nodes competing for that reward, and it is a question of fortune and computing power (the further guessing calculations you can execute, the luckier you are).

Also, the costs of being a mining node are considerable, not only because of the powerful hardware needed (in case you have a faster processor than your competitors, you have a better chance of finding the correct number before they perform ), but also due to the large amounts of electricity that running these processors 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 value of bitcoin relative to cost of power and hardware could go up over the next few decades 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 approximately 10 minutes to process a block.

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