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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 2 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 like gold mining in that the bitcoins exist in the protocols design (like the gold is underground), but they havent been introduced 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 cubes of validated transactions and including them in the blockchain.

Backtracking a bit, lets discuss nodes. A node is a powerful computer that runs the bitcoin applications and assists to keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin software (free) and leave a certain port open (the drawback is 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, that will relay the information to nodes they know, etc.. This way it ends up getting around the whole network fairly fast. .

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

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(For trivia lovers, this number is called a nonce, which is a concatenation of number employed once. In the instance of bitcoin, the nonce is an integer see this site between 0 and 4,294,967,296.)

How can they find this number By guessing at random. The hash function which makes it impossible to predict exactly what the output will be. So, miners guess the mystery number and use the hash function to the combination of the guessed number and the data in the cube. The resulting hash has to start with a pre-established number of zeroes.

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

The first miner to get a resulting hash within the desirable range announces its victory to the remainder of the network. The rest of the miners immediately cease work on that block and start trying to figure out the puzzle number for the next one. As a reward for the own work, the victorious miner has some new bitcoin. .

In the time of writing, the payoff is 12.5 bitcoins, which in time of writing is worth almost $200,000.

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

Also, the costs of being a mining node are considerable, not only due to the powerful 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 do), but also due to the large amounts of electricity that running these processors consumes. .

And, the number of bitcoins given as a reward for solving the puzzle will decrease. Its 12.5 now, but it halves every four years or so (the next one is expected in 2020-21). The worth of bitcoin relative to price of electricity and hardware could extend up during the next few decades to partially compensate this reduction, but its not certain. .

The problem of this calculation (the required number of check these guys out zeroes at the beginning of the hash string) is corrected frequently, so that it requires on average about 10 minutes to process a block.

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

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