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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 process to permit a performance of around two million transactions per day. In 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. But bitcoin isnt bodily, so why do we call it mining
Since its similar to 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 mild yet (like the gold hasnt yet been dug up). 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 confirmed transactions and including them in the blockchain.
Backtracking a little, 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 simply download the bitcoin applications (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 which it knows, that will relay the information to nodes they know, etc.. That way it ends up getting around the entire network pretty quickly. .
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 so by solving a complex mathematical puzzle that's part of the bitcoin program, and including the answer in the cube. The mystery that needs solving is to find a number which, when combined with the data in the cube 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 can be a concatenation of number employed once. In the case of bitcoin, the nonce is an integer 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 what the output will be. So, miners guess the mystery number and use the hash function to the combination of the guessed number and also the information in the cube. The resulting hash must begin with a pre-established number of zeroes.
Whats more, there might be several nonces that make the desired result, or there may 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 remainder of the network. The rest of the miners immediately cease work on that block and start trying to find out the mystery number for the next one. As a reward for the work, the victorious miner gets some new bitcoin. .
At the time of writing, the payoff is 12.5 bitcoins, which at time of writing is worth almost $200,000.
Though its not nearly as cushy a bargain as it sounds. There are a whole lot of mining nodes competing for this reward, and it is a question of luck and computing power (the further guessing calculations you can perform, the luckier you are).
Additionally, the costs of being a mining node are considerable, not only due to the powerful hardware needed (in case you have a faster processor than your opponents, you've got a better chance of finding the right number before they do), but also due to the large amounts of power that running these processors consumes. .
And, the number of bitcoins awarded as a reward for solving the mystery will decrease. Its 12.5 now, but it pits each four years or so (the next one is anticipated in 2020-21). The value of bitcoin relative to cost 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 required number of zeroes at the beginning of the hash string) is corrected frequently, so it requires 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 continuous and diminishing flow try these out of new coins until the highest number of 21 million is reached (anticipated some time in 2140).