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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 procedure to permit a performance of around 2 million transactions every 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. But 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 (just as the gold exists underground), but they havent been brought out into the light yet (just as the golden hasnt yet 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 cubes of confirmed transactions and including them in the blockchain.

Backtracking a bit, lets talk about nodes. A node is a powerful computer which runs the bitcoin applications and helps keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin software (totally free ) and 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 some nodes that it knows, that will relay the information to nodes they know, etc.. That way it ends up getting around the whole network fairly quickly. .

Some nodes are mining nodes (usually known as miners). These set outstanding transactions into blocks and add them to the blockchain. How do they do this By solving a complex mathematical puzzle that's a portion of the 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 through a hash function, produces a result that's within a certain range.

(For fiction fans, this number is known as a nonce, which is 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 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 apply the hash function to the combination of that guessed number and also the data 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 may be none (in the event the miners keep trying, but with a different block configuration). .

The first miner you could check here to get 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 block and start trying to figure out the puzzle number for the next one. As a reward for the own work, the victorious miner gets some new bitcoin. .

At the time of writing, the reward is 12.5 bitcoins, which at time of writing is worth almost $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 benefit, and it is a question of fortune and computing power (the further guessing calculations you can execute, the luckier you're ).

Also, the costs of being a mining node are considerable, not only because of the effective hardware needed (in case you've got a faster processor than your competitors, you have a better chance of finding the correct number before they perform ), but also because of the large amounts of power that running these processors consumes. .

And, the number of all bitcoins awarded as a reward for solving the mystery will decrease. Its 12.5 now, but it halves every four decades or so (the next one is anticipated in 2020-21). The value of bitcoin relative to cost of electricity and hardware could go up during the next few decades to partly compensate this reduction, but find out here now its not certain. .

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

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