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Instead, they went with Solution 2. The resulting currency, known as bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification process 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. 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 is underground), but they havent been brought out into the light yet (like the gold 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 cubes of confirmed transactions and including them in the blockchain.

Backtracking a little, lets discuss 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 simply download the bitcoin applications (free) and 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.. This way it ends up getting around the whole network pretty fast. .

Some nodes are mining nodes (usually referred to as miners). These group outstanding transactions into cubes and add them into the blockchain. How do they do this By solving a intricate mathematical puzzle that is part of the bitcoin app, and including the answer in the cube. The puzzle that needs solving is to find a number that, when combined with all the information in the cube and passed via a hash function, creates a result that is within a certain range.

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(For fiction fans, this number is known as a nonce, which is a concatenation of number used 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 makes it impossible to forecast exactly what the outcome will be. So, miners guess the mystery check it out number and apply the hash function to the combination of that guessed number and the data in the block. The resulting hash must begin with a pre-established number of zeroes.

Whats more, there might be several nonces that make the go to website intended result, or there might be none (in which case the next miners keep trying, but with a different block configuration). .

The first miner to get 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 start trying to find out the mystery number for your next one. As a reward for its work, the victorious miner has some new bitcoin. .

At the time of writing, the payoff is 12.5 bitcoins, which at time of writing will be worth almost $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 is a question of fortune and computing power (the further guessing calculations you can perform, the luckier you're ).

Also, 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 correct number before they do), but also due to the large amounts of power that running these chips consumes. .

And, the number of bitcoins awarded 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 anticipated in 2020-21). The value of bitcoin relative to price of power and hardware could go up over the next few decades 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 it takes on average approximately 10 minutes to process a block.

Why 10 minutes That is the amount of time the bitcoin programmers think is necessary for a steady and diminishing flow of new coins until the highest number of 21 million is attained (expected some time in 2140).

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