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Insteadthey 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 two million transactions every 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 out of the ground. However, bitcoin isnt bodily, so why do we call it mining

Since its similar to gold mining in that the bitcoins exist in the protocols design (like 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 perform so as a reward for creating cubes 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 assists 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 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 a few nodes which it knows, that will relay the information to nodes they know, etc.. This way it ends up getting around the entire network fairly quickly. .

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

(For trivia lovers, this number is known as a nonce, which can be a concatenation of number used once. In the instance 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 forecast 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 cube. The resulting hash has to start with a pre-established number of zeroes.

Whats more, there might be several nonces that produce 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 get a resulting hash within the desired range announces its success to the remainder of the network. All the other miners immediately stop work on that block and begin trying to find out the helpful hints mystery 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 at time of writing will be worth nearly $200,000.

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Though its not nearly as cushy a deal 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 further guessing calculations you can perform, the luckier you're ).

Also, the expenses of being a mining node are considerable, not only due to the powerful hardware needed (if you have a faster processor than your competitors, you have a better chance of finding the correct number before they do), but also due to the large amounts of power that running these chips consumes. .

And, the number of all bitcoins given as a reward for solving the puzzle will decrease. Its 12.5 now, however, it pits each four decades or so (the next one is expected in 2020-21). The value of bitcoin relative to price of electricity and hardware useful link could extend up during the next few years to partly compensate this reduction, but its not certain. .

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

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