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Insteadthey went with Solution 2. The resulting currency, known as bitcoin cash, increased the blocksize to 8 Mb in order to accelerate the verification process to allow a performance of around two 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 bodily, so why do we call it mining
Since 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 (just as the gold hasnt yet 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 bit, lets talk about nodes. A node is a powerful computer that runs the bitcoin applications and assists 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 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, who will relay the information to nodes that they know, etc.. That 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 cubes and add them to the blockchain. How can they do so by solving a complex mathematical mystery that's a portion of the bitcoin program, and including the answer in the cube. The mystery that needs solving is to find a number that, when combined with all the information in the cube and passed through a hash function, creates a result that's within a certain range.
(For trivia lovers, this number is called a nonce, which is a concatenation of number used once. In the case 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 makes it impossible to predict exactly what the output will be. So, miners guess the puzzle number and apply the hash function to the combination of the guessed number and also the information in the cube. The resulting hash has to begin with a pre-established number of zeroes.
Whats more, there may be several nonces that produce the intended result, or there might be none (in which case the miners keep trying, but with a different block configuration). .
The first check that miner to get a resulting hash within the desired range announces its success to the remainder of the network. All the other miners immediately cease work on that block and start trying to find out the mystery number for the next one. As a reward for the work, the victorious miner has some new bitcoin. .
In the time of writing, the payoff is 12.5 bitcoins, which at time of writing will be worth nearly $200,000.
Though its not nearly as cushy a bargain as it sounds. There are a whole lot of mining nodes competing for that reward, and it is a question of luck and computing power (the more guessing calculations you can execute, the luckier you are).
Additionally, the costs of being a mining node are considerable, not only because of the effective hardware needed (in case you've got a faster processor than your competitors, you have a better chance of finding the right number before they perform ), but also because of the large amounts of power that running these chips consumes. .
And, the number of bitcoins awarded as a reward for solving the mystery will decrease. Its 12.5 now, however, it pits each four years or so (the next one is expected in 2020-21). The worth of bitcoin relative to cost of electricity and hardware could go up during the next few decades to partly compensate this reduction, but its not certain. .
The difficulty of this calculation (the necessary number of zeroes at the beginning of the hash string) is adjusted frequently, so that it requires on average approximately 10 minutes to process a block.
Why 10 minutes That is the amount of time the bitcoin programmers think is necessary for a steady and diminishing flow of new coins until the highest number of 21 million is reached (anticipated some time in 2140).