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Instead, they went with Solution 2. The resulting currency, called 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 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 the bitcoins exist in the protocols design (like the gold exists underground), but they havent been introduced into the light yet (like the golden hasnt been awakened ). 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 little, lets discuss nodes. A node is a powerful computer which runs the bitcoin applications and helps to 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 downside is the fact that it consumes energy and storage space the network at time of writing takes up about 145GB).

One node will send information to some nodes that it knows, who 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 to the blockchain. How can they do this By solving a intricate mathematical puzzle that is part of this bitcoin program, and including the answer in the block. The puzzle that needs solving is to find a number which, when combined with all the data in the cube and passed via a hash function, produces a result that's within a certain range.

(For fiction fans, this number is known as a nonce, which can be a concatenation of number used once. In the case of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

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How do they find this number By guessing at random. The hash function makes it impossible to forecast what the output will be. So, miners suppose the mystery number and apply the hash function to the combination of the guessed number and the information in the block. The resulting hash must start with a pre-established number of zeroes.

Whats more, there may be several nonces that make the intended result, or click to read more there might be none (in which case the miners keep trying, but using a different block configuration). .

The first click here to find out more miner to get a resulting hash within the desirable range announces its success to the remainder of the network. All the other miners immediately stop work on that block and begin trying to find out the mystery number for your next news one. As a reward for its work, the victorious miner has some new bitcoin. .

At the time of writing, the payoff is 12.5 bitcoins, which at time of writing will be worth nearly $200,000.

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Though its not nearly as cushy a bargain as it sounds. There are a lot of mining nodes competing for that reward, and it is a question of fortune 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 due to the powerful hardware needed (in case you have a faster processor than your opponents, you have a better chance of finding the correct number before they perform ), but also because of the large amounts of electricity that running these chips consumes. .

And, the number of bitcoins awarded 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 anticipated in 2020-21). The value of bitcoin relative to cost of power and hardware could extend up over the next few years to partially 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 adjusted frequently, so that it requires on average approximately 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).