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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. However, bitcoin isnt physical, so why do we call it mining
Since its similar to gold mining in that the bitcoins exist in the protocols design (like the gold exists underground), but they havent been brought out into the light yet (just as the gold 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 little, lets talk about nodes. A node is a powerful computer which runs the bitcoin applications 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 downside is the fact 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 which it knows, who will relay the information to nodes that they know, etc.. That way it ends up getting around the entire network pretty fast. .
Some nodes are mining nodes (usually known as miners). These group outstanding transactions into cubes and add them to the blockchain. How do they do so by solving a intricate mathematical puzzle that's part of this bitcoin app, and including the answer in the block. The mystery that needs solving is to find a number that, when combined with all the information in the block and passed via 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 makes it impossible to predict exactly what the outcome will be. So, miners guess the puzzle number and apply the hash function to the combination of the guessed number and also the data in the cube. The resulting hash must start with a pre-established number of zeroes.
Whats more, there may be several nonces that produce the desired result, or there might be none (in the event the miners keep trying, but using a different block configuration). .
The first miner to acquire 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 start trying to find out the puzzle number for your next one. As a reward for its work, the victorious miner gets some new bitcoin. .
At the time of writing, the payoff is 12.5 bitcoins, which at time of writing will be 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've got a better chance of finding the right number before they perform ), but also because of the large amounts of electricity that running these chips consumes. .
And, the number of all bitcoins awarded 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 worth of bitcoin relative to price of electricity and hardware could extend up over the next few years to partly compensate this reduction, but its not certain. .
The problem of this calculation (the required number of zeroes at the beginning of the hash string) is corrected frequently, so that it requires 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 for a continuous and diminishing flow of new coins until the highest number of 21 million has been attained (expected some time in 2140).