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Insteadthey went with Solution 2. The resulting currency, known as bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification procedure 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 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 (like the gold exists underground), but they havent been introduced into the mild yet (just as the gold hasnt yet been dug up). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.
They get to do this as a reward for creating blocks 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 software and helps keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin software (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 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.. That way it ends up getting around the entire network pretty fast. .
Some nodes are mining nodes (usually known as miners). These group outstanding transactions into cubes and add them to the blockchain. How do they do this By solving a complex mathematical mystery that's a portion of this bitcoin app, and including the answer in the cube. The puzzle that needs solving is to find a number that, when combined with the information in the cube and passed via a hash function, creates a result that is within a certain range.
How do they find this number By guessing at random. The hash function makes it impossible to forecast what the outcome 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 has to begin with a pre-established number of zeroes.
Whats more, there might be several nonces that make the intended result, or there might 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 success to the rest of the network. The rest of the miners immediately stop work on that block and begin trying to figure out the puzzle number for your next one. As a reward for its own work, the victorious miner gets some new bitcoin. .
In the time of writing, the payoff is 12.5 bitcoins, which at time of writing is worth nearly $200,000.
Also, the costs of being a mining node are considerable, not only because of the effective hardware needed (in case you've got a faster processor than your competitors, you have a better chance of finding the correct number before they top article do), but also because of the large amounts of electricity that running these chips 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 value of bitcoin relative to cost of electricity and hardware could go up over the next few years to partially compensate this reduction, but its not certain. .
The difficulty of the calculation (the required number of zeroes at the beginning of the hash string) is adjusted frequently, so it takes 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 for a continuous and diminishing flow of new coins until the highest number of 21 million has been reached (expected some time in 2140).