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Instead, they 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 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 bitcoin mining, you envisage coins being dug from 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 (like the gold exists underground), but they havent been brought out into the light yet (like the golden hasnt yet been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.

They get to do so as a reward for creating blocks of confirmed transactions and including them in the blockchain.

Backtracking a bit, lets talk about nodes. A node is a powerful computer that runs the bitcoin software and helps to keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin applications (free) and leave a certain port open (the drawback is that it consumes energy and storage space the network at time of writing takes up about 145GB).

One node will send information to some nodes which it knows, that will relay the information to nodes they know, etc.. That way it ends up getting around the whole network pretty quickly. .

Some nodes are mining nodes (usually referred to as miners). These set outstanding transactions into cubes and add them to the blockchain. How can they do so by solving a intricate mathematical puzzle that is a portion of this bitcoin app, and including the answer in the block. The puzzle that needs solving is to find a number that, when combined with the information in the cube and passed via a hash function, produces a result that is within a certain range.

 

 

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(For trivia lovers, this number is known as a nonce, which can be a concatenation of number used once. In the wikipedia reference 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 which makes it impossible to predict what the outcome will be. So, miners suppose the mystery number and use the hash function to the combination of the guessed number and the data in the block. The resulting hash must begin 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 with a different block configuration). .

The first miner to get a resulting hash within the desired range announces its success to the remainder of the network. The rest of the miners immediately cease work on that block and begin trying to find out the puzzle number for your next one. As a reward for its own work, the victorious miner has some new bitcoin. .

In the time of writing, the reward is 12.5 bitcoins, which in time of writing will be worth almost $200,000.

 

 

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Although its not nearly as cushy a deal as it sounds. There are a lot of mining nodes competing for that reward, and it is a question of luck and computing power (the more guessing calculations you can perform, the luckier you are).

Also, the costs of being a mining node are considerable, not only because of the powerful hardware needed (in case you've got a faster processor than your opponents, you've got a better chance of finding the right number before they perform ), 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, however, it pits each four years or so (the next one is expected in 2020-21). The value of bitcoin relative to price of power and hardware could extend up over the next few years to partially 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 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).

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