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Instead, they went with Solution 2. The resulting currency, called bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification process 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

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 (like the gold hasnt been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.

They get to do so 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 applications and helps keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin software (free) and also leave a certain port open (the downside is 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 that it knows, who will relay the information to nodes they know, etc.. This way it ends up getting around the entire network pretty quickly. .

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

(For trivia lovers, this number is called a nonce, which is a concatenation of number employed 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 which makes it impossible to predict exactly what the output will be. So, miners guess the puzzle number and use the hash function to the combination of the guessed number and the information in the block. The resulting hash must start with a pre-established number of zeroes.

Whats more, there may be several nonces that produce the intended result, or there might 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 desired 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 puzzle number for the next one. As a reward for the work, the victorious miner has some new bitcoin. .

At the time of writing, the payoff 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 bargain as it sounds. There are a whole lot of mining nodes competing for that benefit, and it's a question of fortune and computing power (the further guessing calculations you can execute, the luckier you're ).

Additionally, the costs click to find out more of being click to read a mining node are considerable, not only due to the effective hardware needed (if you've got a faster processor than your competitors, you have a better chance of finding the right number before they do), but also due to the large amounts of power that running these processors consumes. .

And, the number of all bitcoins given as a reward for solving the mystery will decrease. Its 12.5 now, however, it halves every four years or so (the next one is expected in 2020-21). The worth of bitcoin relative to cost of power and hardware could go up during the next few years to partially compensate this reduction, but its not certain. .

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

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