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Insteadthey went with Solution 2. The resulting currency, called bitcoin cash, increased the blocksize to 8 Mb in order to accelerate the verification process to permit 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 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 the bitcoins exist in the protocols design (just as the gold exists 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 confirmed transactions and including them in the blockchain.
Backtracking a bit, lets discuss nodes. A node is a powerful computer which runs the bitcoin applications and assists keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin software (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, that will relay the information to nodes that they know, etc.. That way it ends up getting around the whole network fairly fast. .
Some nodes are mining nodes (usually known as miners). These set outstanding transactions into cubes and add them to the blockchain. How can they do so by solving a complex mathematical puzzle that's part 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 data in the cube and passed through 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 exactly what the output will be. So, miners suppose the puzzle number and use the hash function to the combination of the guessed number and the data in the cube. The resulting hash must start with a pre-established number of zeroes.
Whats more, there might be several nonces that make the intended result, or there might 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 desirable range announces its success to the rest of the network. The rest of the miners immediately stop work on that block and start trying to figure out the mystery number for the next one. As a reward for its work, the victorious miner gets some new bitcoin. .
At the time of writing, the payoff is 12.5 bitcoins, which in time of writing will be worth nearly $200,000.
Additionally, the expenses of being a mining node are considerable, not only because of the powerful hardware needed (if you have a faster processor than your opponents, you have a better chance of finding the correct number before they perform ), but also because of the large amounts of power that running these processors 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 years or so (the next one is anticipated in 2020-21). The value of bitcoin relative to price of electricity and hardware could extend up over the next few decades to partially compensate this reduction, but its not certain. .
The difficulty of this calculation (the required number of zeroes at the beginning of the hash string) is corrected frequently, so it requires on average about 10 minutes to process a block.
Why 10 minutes That is the amount of time the bitcoin developers think is necessary for a continuous and diminishing flow of new coins until the maximum number of 21 million is attained (anticipated some time in 2140).