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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 procedure to permit a performance of around 2 million transactions per 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 out of the ground. However, 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 exists underground), but they havent been introduced into the light yet (like the gold hasnt been dug up). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.
They get to do so as a reward for creating cubes of validated transactions and including them in the blockchain.
Backtracking a bit, lets talk about nodes. A node is a powerful computer which runs the bitcoin software and assists 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 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 which it knows, who will relay the information to nodes they know, etc.. That way it ends up getting around the entire network fairly quickly. .
Some nodes are mining nodes (usually referred to as miners). These set outstanding transactions into blocks and add them to the blockchain. How do they do so by solving a intricate mathematical mystery that is a portion of the bitcoin app, and including the answer in the cube. The puzzle that needs solving is to find a number which, when combined with all the data in the cube and passed via a hash function, produces a result that is within a certain range.
(For trivia lovers, this number is known as a nonce, which is a concatenation of number employed once. In the case of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)
How can they find this number By guessing at random. The hash function makes it impossible to forecast exactly what the output will be. So, miners suppose 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 has to start 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 the event the miners keep trying, but using a different block configuration). .
The first miner to get a resulting hash within the desired range announces its success to the rest of the network. All the other miners immediately cease work on that block and begin trying to figure out the mystery number for the next one. As a reward for its own work, the victorious miner has some new bitcoin. .
In the time of writing, the payoff is 12.5 bitcoins, which in time of writing is worth almost $200,000.
Though its not nearly as cushy a deal as it sounds. There are a lot of mining nodes competing for this reward, and it's a question of fortune and computing power (the further guessing calculations you can perform, the luckier you're ).
Also, the costs of being a mining node are considerable, not only due to the powerful hardware needed (if you've got a faster processor than your competitors, you have a better chance of finding the correct number before they perform ), but also due to the large amounts of electricity that running these processors consumes. .
And, the number of all bitcoins given as a reward for solving the mystery will decrease. Its 12.5 now, however, it halves every four years or so (the next one is expected in 2020-21). The value of bitcoin special info relative to cost of power and hardware could extend up during 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 that it takes on average approximately 10 minutes to process a block.
Why 10 minutes that's the amount of time that the bitcoin programmers think is necessary for a steady and diminishing flow of new coins until the maximum number of 21 million is reached (expected some time in 2140).