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Instead, they went with Solution 2. The resulting currency, known as bitcoin cash, increased the blocksize to 8 Mb in order to accelerate the verification process to allow a performance of around two million transactions every day. In 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 out of the ground. However, bitcoin isnt bodily, 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 is underground), but they havent been introduced into the mild yet (just as the golden hasnt been awakened ). 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 bit, lets discuss nodes. A node is a powerful computer which runs the bitcoin applications and helps to keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin applications (totally free ) and also 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 a few nodes which it knows, that will relay the information to nodes that they know, etc.. This way it ends up getting around the entire network pretty quickly. .

Some nodes are mining nodes (usually known as miners). These group outstanding transactions into blocks and add them into the blockchain. How do they do this By solving a intricate mathematical puzzle that's part of this bitcoin program, and including the answer in the cube. The mystery that needs solving is to find a number that, when combined with all the data in the block and passed via a hash function, produces a result that's within a certain range.

(For fiction fans, this number is called a nonce, which can be a concatenation of number used once. In the case 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 suppose the mystery number and apply the hash function to the combination of that guessed number and the information 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 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 victory to the remainder of the network. All the other miners immediately stop work on that block and begin trying to figure out the mystery number for the next one. As a reward for the work, the victorious miner has some new bitcoin. .

In the time of writing, the reward is 12.5 bitcoins, which at time of writing will be 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 this reward, and it is a question of luck and computing power (the more guessing calculations you can perform, the luckier you are).

Also, the expenses of being a mining node are considerable, not only because of the effective 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 power 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, however, it pits each four years or so (the next one is expected in 2020-21). The value of bitcoin relative to cost of power and hardware could extend up over the next few years to partially compensate this reduction, but its not certain. .

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

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