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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 process to allow 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 out of the ground. But bitcoin isnt bodily, so why do we call it mining
Because 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 light yet (like the golden hasnt 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 cubes of confirmed transactions and including them in the blockchain.
Backtracking a bit, lets talk about nodes. A node is a powerful computer that runs the bitcoin applications and helps to 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 downside is the fact 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 which it knows, that will relay the information to nodes they know, etc.. That way it ends up getting around the whole 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 complex mathematical puzzle that's a portion of the bitcoin program, and including the answer in the block. The mystery that needs solving is to find a number which, when combined with all the information in the block and passed through a hash function, produces a result that's within a certain range.
How do 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 puzzle number and use the hash function to the combination of that guessed number and also the data 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 using a different block configuration). .
The first miner to get a resulting hash within the desired range announces its victory to the remainder 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 gets some new bitcoin. .
At the time of writing, the reward is 12.5 bitcoins, which in time of writing is worth almost $200,000.
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 correct number before they perform ), but also due to the large amounts of power that running these chips consumes. .
And, the number of all bitcoins given as a reward for solving the puzzle will decrease. Its 12.5 now, but it halves every four decades or so (the next one is expected in 2020-21). The value of bitcoin relative to cost of power and hardware could extend up over the next few decades 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 adjusted why not look here frequently, so that it requires on average about 10 minutes to process a block.
Why 10 minutes That is 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).