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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 allow a performance of around 2 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 out of the ground. But bitcoin isnt physical, so why do we call it mining
Because its similar to gold mining in that the bitcoins exist in the protocols design (like the gold is underground), but they havent been brought out into the light 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 do so 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 software and assists keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin applications (totally free ) and also leave a certain port open (the downside 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, who will relay the information to nodes that they know, etc.. That way it ends up getting around the whole network fairly fast. .
Some nodes are mining nodes (usually known as miners). These set outstanding transactions into cubes and add them into the blockchain. How do they do this By solving a intricate mathematical mystery that's part of this bitcoin app, and including the answer in the block. The puzzle that needs solving is to find a number that, when combined with the information in the cube and passed via a hash function, creates a result that is within a certain range.
How do they find this number By guessing at random. The hash function makes it impossible to forecast exactly 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 data in the block. The resulting hash has to begin with a pre-established number of zeroes.
Whats more, there may be several nonces that make the intended result, or there might be none (in the event the miners keep trying, but with a different block configuration). .
The first miner to acquire a resulting hash within the desirable range announces its victory to the remainder of the network. All the other miners immediately cease work on that block and start trying to figure out the puzzle number for your next one. As a reward for its own work, the victorious miner has some new bitcoin. .
In the time of writing, the reward is 12.5 bitcoins, which in time of writing will be worth almost $200,000.
Additionally, the expenses of being a mining node are considerable, not only due to the effective hardware needed (in case you've got a faster processor than your opponents, you've got a better chance of finding the right number before they perform ), 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 puzzle will decrease. Its 12.5 now, but it pits each four decades or so (the next one is anticipated in 2020-21). The worth of bitcoin relative to cost of electricity and hardware could go up during the next few decades to Free Bitcoin Mining Game partly compensate this reduction, but its not certain. .
The problem of the calculation (the required number of zeroes at the beginning of the hash string) is adjusted frequently, so that it takes on average about 10 minutes to process a block.
Why 10 minutes That is the amount of time that the bitcoin programmers think is necessary to get a steady and diminishing flow of new coins until the maximum number of 21 million is attained (anticipated some time in 2140).