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Insteadthey went with Solution 2. The resulting currency, called bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification procedure to allow a performance of around two 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 like 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 (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 do so as a reward for creating blocks of confirmed 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 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 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 that 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 group outstanding transactions into cubes and add them to the blockchain. How can they do this By solving a intricate mathematical puzzle that is a portion of the bitcoin app, and including the answer in the cube. The mystery that needs solving is to find a number which, when combined with all the information in the block 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.)

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How do they find this number By guessing at random. The hash function which makes it impossible to forecast exactly what the outcome will be. So, miners suppose the puzzle number and apply the hash function to the combination of the guessed number and also the information in the cube. The resulting hash must start with a pre-established number of zeroes.

Whats more, there may be several nonces that make the intended result, or there might be none (in the event the miners keep trying, but using a different block configuration). .

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

At the time of writing, the reward read review is 12.5 bitcoins, which at time of writing will be worth nearly $200,000.

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Though its not nearly as cushy a deal as it sounds. There are a 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're ).

Also, the expenses of being a mining node are considerable, not only due to the powerful hardware needed (if you've got a faster processor than your competitors, you've got 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 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 problem of the calculation (the necessary number of zeroes at the beginning of the hash string) is adjusted frequently, so it requires on average about 10 minutes to process a block.

Why 10 minutes that's the amount of time the bitcoin programmers think is necessary for a continuous and diminishing flow of new coins until the maximum number of 21 million is attained (expected some time in 2140).