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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 two million transactions every day. In 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 like gold mining in the bitcoins exist in the protocols design (like the gold is underground), but they havent been introduced into the mild yet (just as 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 validated transactions and including them in the blockchain.

Backtracking a bit, lets discuss nodes. A node is a powerful computer that 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 (free) and also 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 that it knows, that will relay the information to nodes they know, etc.. This way it ends up getting around the entire 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 complex mathematical puzzle that is a portion of the bitcoin program, and including the answer in the cube. The mystery that needs solving is to find a number that, when combined with the data Read Full Report in the block and passed via 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 used once. In the instance of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

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How can they find this number By guessing at random. The hash function which makes it impossible to predict exactly what the output will be. So, miners suppose the mystery number and use the hash function to the combination of that guessed number and the information 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 may be none (in the event the miners keep trying, but with a different block configuration). .

The first miner to get a resulting hash within the desirable range announces its victory to the rest of the network. The rest of the miners immediately stop work on that block and begin trying to find out the mystery number for the next one. As a reward for its own work, the victorious miner has some new bitcoin. .

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

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Though its not nearly as cushy a deal as it sounds. There are a whole lot of mining nodes competing for that reward, and it's a question of fortune and computing power (the more guessing calculations you can perform, the luckier you're ).

Also, the expenses of being a mining node are considerable, not only due to the powerful hardware needed (if you've got a faster you could try these out processor than your opponents, you've got a better chance of finding the right number before they do), 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 puzzle will decrease. Its 12.5 now, but it halves anchor every four decades or so (the next one is expected in 2020-21). The value of bitcoin relative to price of power and hardware could go up over the next few years 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 corrected frequently, so that it takes on average approximately 10 minutes to process a block.

Why 10 minutes that's the amount of time the bitcoin programmers think is necessary to get a continuous and diminishing flow of new coins until the highest number of 21 million is reached (anticipated some time in 2140).