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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 procedure to permit a performance of around 2 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 bodily, so why do we call it mining
Because its like gold mining in that the bitcoins exist in the protocols design (like the gold is underground), but they havent been introduced into the light yet (like the golden hasnt yet 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 little, lets discuss nodes. A node is a powerful computer that runs the bitcoin software and assists 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 that it consumes energy and storage space the network at time of writing carries 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.. This way it ends up getting around the entire network pretty quickly. .
Some nodes are mining nodes (usually known as miners). These group outstanding transactions into blocks and add them into the blockchain. How can they do this By solving a complex mathematical mystery that's a portion of the bitcoin app, and including the answer in the block. The mystery that needs solving is to find a number that, when combined with the information in the cube and passed through 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 which makes it impossible to predict exactly what the output will be. So, miners suppose the mystery number and apply the hash function to the combination of the guessed number and also the data in the block. 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, check these guys out or there may be none (in which case the miners keep trying, but using a different block configuration). .
The first miner to acquire a resulting hash within the desirable range announces its success to the rest of the network. All the other miners immediately stop work on that block and begin trying to figure out the puzzle number for the next one. As a reward for the own work, the victorious miner has some new bitcoin. .
In the time of writing, the payoff is 12.5 bitcoins, which at time of writing is worth almost $200,000.
Additionally, the expenses of being a mining node are considerable, not only because of the effective hardware needed (if you have a faster processor than your competitors, you have a better chance of finding the right number before they do), 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 mystery will decrease. Its 12.5 now, but it halves every four decades or so (the next one is expected in 2020-21). The worth of bitcoin relative to price of electricity and hardware could go up over the next few years to partly compensate this reference reduction, but its not certain. .
The difficulty of the calculation (the required number of zeroes at the beginning of the hash string) is corrected frequently, so it requires on average about 10 minutes to process a block.
Why 10 minutes that's the amount of time the bitcoin programmers think is necessary for a steady and diminishing flow of new coins until the maximum number of 21 million has been attained (expected some time in 2140).