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Instead, they went with Solution 2. The resulting currency, known as bitcoin cash, 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 physical, so why do we call it mining

Because 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 (like the golden hasnt yet 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 blocks of validated transactions and including them in the blockchain.

Backtracking a little, 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 just download the bitcoin applications (totally free ) and also leave a certain port open (the drawback is the fact 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 they know, etc.. That way it ends up getting around the whole network fairly fast. .

Some nodes are mining nodes (usually referred to as miners). These group outstanding transactions into blocks and add them to the blockchain. How can they do this By solving a intricate mathematical puzzle that's part of this bitcoin app, 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, produces a result that's within a certain range.

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(For fiction fans, 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.)

How do they find this number By guessing at random. The hash function which makes it impossible to forecast what the output will be. So, miners suppose the mystery number and use the hash function to the combination of the guessed number and the information in the block. 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 which case the miners keep trying, but with a different block configuration). .

The first miner to acquire a resulting hash within the desirable range announces its success to the rest of the network. All the other miners immediately stop work on that block and begin trying to figure out the mystery number for your next one. As a reward for its own work, the victorious miner gets some new bitcoin. .

In a fantastic read the time of writing, the reward is 12.5 bitcoins, which at time of writing is worth nearly $200,000.

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Although its not nearly as cushy a bargain as it sounds. There are a whole 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 ).

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

And, the number of bitcoins awarded as a reward for solving the puzzle will decrease. Its 12.5 now, however, it halves every four years or so (the next one is anticipated in 2020-21). The worth of bitcoin relative to price of electricity and hardware could go up during the next few decades to partly compensate this reduction, but 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 about 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 reached (anticipated some time in 2140).

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