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Instead, they went with Solution 2. The resulting currency, called bitcoin cash, increased the blocksize to 8 Mb in order to accelerate the verification process to permit 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 about bitcoin mining, you envisage coins being dug from 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 (just as the gold is underground), but they havent been brought out 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 do so 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 which runs the bitcoin software and helps to 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 drawback 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.. This way it ends up getting around the entire 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 can they do so by solving a complex mathematical mystery that's part of this bitcoin app, and including the answer in the block. The mystery that needs solving is to find a number which, when combined with the data in the cube and passed via a hash function, produces a result that is within a certain range.
(For fiction fans, this number is called a nonce, which can be a concatenation of number employed once. In the instance of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)
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 mystery number and use the hash function to the combination of the guessed number and also the data in the block. The resulting hash must begin with a pre-established number of zeroes.
Whats more, there might be several nonces that make the intended result, 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 desired range announces its victory to the remainder of the network. The rest of the miners immediately cease work on that block and start trying to figure out the mystery number for your next one. As a reward for its work, the victorious miner has some new bitcoin. .
In the time of writing, the reward is 12.5 bitcoins, which at time of writing will be worth almost $200,000.
Although its not nearly as cushy a deal as it sounds. There are a lot of mining nodes competing for that benefit, and it's a question of fortune and computing power (the more guessing calculations you can perform, the luckier you are).
Additionally, the costs of being a mining node are considerable, not why not find out more only because of the powerful hardware needed (if you have a faster processor than your opponents, you've got a better chance of finding the correct number before they do), but also due to the large amounts of power 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 pits each four years or so (the next one is expected in 2020-21). The worth of bitcoin relative to price of electricity 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 frequently, so it takes on average about 10 minutes to process a block.
Why 10 minutes that's the amount of time that the bitcoin developers think is necessary to get a continuous and diminishing flow of new coins until the highest number of 21 million has been attained (expected some time in 2140).