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Insteadthey went with Solution 2. The resulting currency, known as 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 about bitcoin mining, you envisage coins being dug out of the ground. However, bitcoin isnt physical, so why do we call it mining
Because its like 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 (just as the gold hasnt been dug up). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.
They get to do this as a reward for creating cubes of validated transactions and including them in the blockchain.
Backtracking a little, lets discuss 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 simply download the bitcoin software (totally free ) and 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 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 whole 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 complex mathematical puzzle that is part of this 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 in the block and passed via a hash function, produces a result that is within a certain range.
How can they find this number By guessing at random. The hash function which makes it impossible to forecast what the output will be. So, miners guess the puzzle number and apply the hash function to the combination of that guessed number and also the data in the cube. The resulting hash must begin with a pre-established number of zeroes.
Whats more, there may be several nonces that make the desired 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 desired range announces its victory to the rest of the network. All the other 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 gets some new bitcoin. .
At the time of writing, the reward is 12.5 bitcoins, which in time of writing is worth almost $200,000.
Additionally, the costs of being a mining node are considerable, not only due to the powerful hardware needed (in case you have navigate here a faster processor than your opponents, you have 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 given as a reward for solving the mystery will decrease. Its 12.5 now, however, it halves every four decades or so (the next one is anticipated in 2020-21). The value of bitcoin relative to cost of power and hardware could go up over the next few years to partially compensate this reduction, but its not certain. .
The difficulty of the calculation (the necessary number of zeroes at the beginning of the hash string) is adjusted frequently, so it requires 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 for a steady and diminishing flow of new coins until the Resources highest number of 21 million is reached (anticipated some time in 2140).