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Instead, they went with Solution 2. The resulting currency, known as bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification process to allow 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 from the ground. But bitcoin isnt physical, so why do we call it mining
Because its similar to gold mining in the bitcoins exist in the protocols design (like the gold is underground), but they havent been introduced into the light yet (like the golden hasnt been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.
They get to perform this as a reward for creating blocks 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 software and helps 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 a few nodes which it knows, who will relay the information to nodes they know, etc.. That 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 blocks and add them into the blockchain. How can they do this By solving a complex mathematical mystery that's part of the bitcoin program, and including the answer in the block. The mystery that needs solving is to find a number which, when combined with the information in the block and passed via a hash function, creates a result that's within a certain range.
How can they find this number By guessing at random. The hash function makes it impossible to predict what the output will be. So, miners guess the mystery number and apply the hash function to the combination of that guessed number and the data in the block. The resulting hash has to start with a pre-established number of zeroes.
Whats more, there might be several nonces that produce the desired result, or there may be none (in which case the miners keep trying, but with a different block configuration). .
The first miner to acquire a resulting hash within the desired range announces its victory to the rest of the network. The rest of the miners immediately cease work on that block and begin trying to figure out the puzzle number for your next one. As a reward for the work, the victorious miner has some new bitcoin. .
At the time of writing, the reward is 12.5 bitcoins, which at time of writing will be worth nearly $200,000.
Additionally, the costs of being a mining node are considerable, not only due to the powerful 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 do), but also due to the large amounts of electricity that running these processors consumes. .
And, the number of bitcoins awarded as a reward for solving the puzzle will decrease. Its 12.5 now, but it halves every four years or so (the next one is expected in 2020-21). The worth of bitcoin relative to price of electricity and hardware could go up over the next few years to partly compensate this reduction, but its not certain. .
The problem of the calculation (the required number of zeroes at the beginning of the hash string) is click reference corrected frequently, so it takes on average approximately 10 minutes to process a block.
Why 10 minutes that's the amount of time that the bitcoin developers think is necessary for a continuous and diminishing flow of new coins until the highest number of 21 million is reached (anticipated some time in 2140).