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Instead, they went with Solution 2. The resulting currency, called bitcoin cash, increased the blocksize to 8 Mb in order to accelerate the verification process to permit 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 bitcoin mining, you envisage coins being dug out of the ground. However, bitcoin isnt physical, so why do we call it mining
Because 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 mild yet (just as the golden 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 cubes of confirmed transactions and including them in the blockchain.
Backtracking a bit, lets discuss nodes. A node is a powerful computer that runs the bitcoin software 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 some nodes that it knows, who will relay the information to nodes they know, etc.. That way it ends up getting around the entire network fairly quickly. .
Some nodes are mining nodes (usually known as miners). These set outstanding transactions into blocks and add them into 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 block. The puzzle that needs solving is to find a number which, when combined with the data in the cube and passed through a hash function, creates a result that's within a certain range.
(For trivia lovers, this number is called 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.)
How can they find this number By guessing at random. The hash function which makes it impossible to predict what the output will be. So, miners suppose the puzzle number and use the hash function to the combination of the guessed number and the data in the block. The resulting hash has to start with a pre-established number of zeroes.
Whats more, there might be several nonces that make the intended result, or there may be none (in the event the miners keep trying, but with a different block configuration). .
The first miner to acquire a resulting hash within the desired range announces its victory to the rest of the network. All the other miners immediately cease work on that block special info and begin trying to find out the mystery number for your next one. As a reward for its own work, the victorious miner has some new bitcoin. .
In the time of writing, the reward is 12.5 bitcoins, which in time of writing is worth almost $200,000.
Although its not nearly as cushy a bargain as it sounds. There are a lot of mining nodes competing for that benefit, and it is a question of fortune and computing power (the more guessing calculations you can execute, the luckier you're ).
Additionally, the expenses of being a mining node are considerable, not only because of the effective hardware needed (if you have a faster processor than your opponents, you've got a better chance of finding the right number before they do), 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 mystery will decrease. Its 12.5 now, but it halves every 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 during the next few decades to partly compensate this reduction, but its not certain. .
The problem of this calculation (the required number of zeroes at the beginning of the hash string) is adjusted frequently, so that it requires on average approximately 10 minutes to process a block.
Why 10 minutes That is the amount of time that the bitcoin programmers think is necessary for a steady and diminishing flow of new coins until the highest number of 21 million is attained (anticipated some time in 2140).