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Insteadthey went with Solution 2. The resulting currency, known as bitcoin cash, increased the blocksize to 8 Mb in order to accelerate the verification procedure to allow a performance of around 2 million transactions every day. In 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 out of the ground. But bitcoin isnt physical, so why do we call it mining

Since its like gold mining in that the bitcoins exist in the protocols design (just as the gold exists underground), but they havent been brought out into the mild 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 perform 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 applications and assists keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin applications (free) and also leave a certain port open (the drawback 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 that it knows, who will relay the information to nodes that they know, etc.. That way it ends up getting around the whole network pretty quickly. .

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

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(For fiction fans, this number is known as a nonce, which is a concatenation of number employed once. In the instance of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

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 guess the puzzle number and use the hash function to the combination of that guessed number and also the data in the cube. The resulting hash must start 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 get a resulting hash within the desirable range announces its victory to the rest of the network. All the other miners visit this web-site immediately stop work on that block and start trying to figure out the puzzle number for your next one. As a reward for its own work, the victorious miner gets some new bitcoin. .

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

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

Also, the costs of being a mining node are considerable, not only due to the effective hardware needed (in case you have a faster processor than your opponents, 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 all bitcoins given as a reward for solving the puzzle will decrease. Its 12.5 now, but it pits each four decades or so (the next one is expected in 2020-21). The value of bitcoin relative to cost of electricity and hardware could go up over the next few years to partially compensate this reduction, but its not certain. .

The difficulty of the calculation (the required number of zeroes at the beginning of the hash string) is adjusted frequently, so that it takes 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 is reached (anticipated some time in 2140).

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