X11 Cryptocurrency for Dummies
Insteadthey 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 about bitcoin mining, you envisage coins being dug from the ground. However, bitcoin isnt physical, so why do we call it mining
Because its like gold mining in the bitcoins exist in the protocols design (like the gold is underground), but they havent been brought out into the mild yet (like the golden hasnt 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 validated transactions and including them in the blockchain.
Backtracking a bit, lets talk about 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 just download the bitcoin software (totally free ) and leave a certain port open (the drawback is 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 that they know, etc.. This way it ends up getting around the entire network pretty quickly. .
Some nodes are mining nodes (usually referred to as miners). These set outstanding transactions into blocks and add them into the blockchain. How can they do this By solving a intricate mathematical mystery that's a portion of this bitcoin app, and including the answer in the cube. The mystery that needs solving is to find a number which, when combined with all the data in the block and passed through a hash function, creates a result that's within a certain range.
(For trivia lovers, this number is called a nonce, which is a concatenation of number employed 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 which makes it impossible to predict what the outcome 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 block. 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 might be none (in which case the miners keep trying, but with a different block configuration). .
The first miner to acquire a resulting hash within the desired range announces its victory to the rest of the network. All the other miners immediately cease work on that block and begin trying to find out the mystery number for your next one. As a reward for its work, the victorious miner has some new bitcoin. .
In the time of writing, the reward is 12.5 bitcoins, which at time of writing is worth almost $200,000.
Although its not nearly as cushy a bargain as it sounds. There are a whole lot of mining nodes competing for this benefit, and it's a question of luck and computing power (the more 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 (if you have a faster processor than your competitors, you've got a better chance of finding the right number before they perform ), but also due to the large amounts of electricity that running these processors consumes. .
And, the number of all 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 expected in 2020-21). The value of bitcoin relative to cost of electricity and hardware could extend up during the next few years to partially compensate this reduction, but its not certain. .
The problem of the calculation (the necessary number of zeroes at the beginning of the hash string) is corrected frequently, so 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 check my source diminishing flow of new coins until the maximum number of 21 million is reached (expected some time in 2140).