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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 allow a performance of around two million transactions per day. At the time of writing, Bitcoin Cash is valued at $545.00 to Bitcoins $6,328.11.

When you hear about bitcoin mining, you envisage coins being dug out of the ground. However, bitcoin isnt physical, 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 is underground), but they havent been brought out into the mild yet (like the gold hasnt yet been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.

They get to perform 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 that runs the bitcoin applications and assists keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin applications (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 carries up about 145GB).

One node will send information to a few nodes which it knows, that will relay the information to nodes they know, etc.. That way it ends up getting around the entire network pretty quickly. .

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

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(For trivia lovers, this number is called a nonce, which can be a concatenation of number used once. In the instance 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 More about the author 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 that 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 produce the desired 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 desirable range announces its victory to the rest 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 gets some new bitcoin. .

In the time of writing, the reward is 12.5 bitcoins, which in time of writing will be worth nearly $200,000.

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Although its not nearly as cushy a deal as it sounds. There are a lot of mining nodes competing for that reward, and it's a question of luck and computing power (the more guessing calculations you can execute, the luckier you're ).

Additionally, the costs of being a mining node are considerable, not only because of the powerful hardware needed (in case you have a faster processor than your competitors, you have a better chance of finding the right number before they do), but also because of the large amounts of electricity that running these chips consumes. .

And, the number of bitcoins awarded as a reward for solving the puzzle will decrease. Its 12.5 now, but it pits each four years or so (the next one is anticipated in 2020-21). The value of bitcoin relative to price of power and hardware could go up during the next few years to partly 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 that it requires on average about 10 minutes to process check that a block.

Why 10 minutes that's 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 has been attained (anticipated some time in 2140).

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