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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 permit 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
Since its like gold mining in that the bitcoins exist in the protocols design (just as the gold exists underground), but they havent been brought out into the light yet (just as the gold hasnt yet been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.
They get to perform this as a reward for creating blocks of validated transactions and including them in the blockchain.
Backtracking a bit, lets discuss nodes. A node is a powerful computer which runs the bitcoin applications and assists to 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 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 some nodes that it knows, that will relay the information to nodes they know, etc.. That way it ends up getting around the whole network fairly quickly. .
Some nodes are mining nodes (usually referred to as miners). These set outstanding transactions into blocks and add them to the blockchain. How do they do so by solving a complex mathematical mystery that's part of this bitcoin program, and including the answer in the cube. The mystery that needs solving is to find a number that, when combined with all the information in the cube and passed via a hash function, produces a result that is within a certain range.
(For trivia lovers, this number is known as a nonce, which can be a concatenation of number employed 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 function which makes it impossible to forecast what the output will be. So, miners guess the mystery number and apply the hash function to the combination of that guessed number and also the information in the cube. The resulting hash has to start with a pre-established number of zeroes.
Whats more, there may 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 desired range announces its success to the rest of the network. All the other miners immediately cease work on that block and start trying to find out the puzzle number for your next one. As a reward for the work, the victorious miner has some new bitcoin. .
At the time of writing, the payoff is 12.5 bitcoins, which at time of writing is worth nearly $200,000.
Although its not nearly as cushy a bargain as it sounds. There are a lot of mining nodes competing for this reward, and it is a question of fortune and computing power (the further guessing calculations you can execute, the luckier you are).
Additionally, 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 opponents, you've got a better chance of finding the right number before they perform ), but also because of the large amounts of electricity that running these chips consumes. .
And, the number of all bitcoins given useful site as a reward for solving the mystery will decrease. Its 12.5 now, but it halves every four years or so (the next one is anticipated in 2020-21). The value of bitcoin relative to price of electricity and hardware could extend up during the next few years to partly compensate this reduction, but its not certain. .
The problem of this calculation (the necessary number of zeroes at the beginning of the hash string) is corrected frequently, so it takes on average about 10 minutes to process a block.
Why 10 minutes that's the amount of time 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 (anticipated some time in 2140).