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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 procedure to permit a performance of around two million transactions per day. In 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
Since its similar to gold mining in the bitcoins exist in the protocols design (like the gold is underground), but they havent been brought out into the light yet (just as 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 confirmed transactions and including them in the blockchain.
Backtracking a little, 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 (free) and leave a certain port open (the downside 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 that it knows, that will relay the information to nodes that 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 set outstanding transactions into blocks and add them into the blockchain. How can they do this By solving a intricate mathematical puzzle that's a portion of this bitcoin app, and including the answer in the block. The mystery that needs solving is to find a number that, when combined with all the information in the block and passed via a hash function, produces a result that's within a certain range.
How do they find this number By guessing at random. The hash function which makes it impossible to forecast what the output will be. So, miners suppose the puzzle number and apply the hash function to the combination of that guessed number and also the data in the block. The resulting hash must start with a pre-established number of zeroes.
Whats more, there might be several nonces that produce the desired result, or there might be none (in which case 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 remainder of the network. The rest of the miners immediately stop work on that block and start trying to find out the mystery number for your next one. As a reward for its own work, the victorious miner gets some new bitcoin. .
In the time of writing, the reward is 12.5 bitcoins, which in time of writing is worth almost $200,000.
Also, the costs of being a mining node are considerable, not only due to the effective hardware needed (in case you have 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 all bitcoins given 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 price of electricity and hardware could go up over the next few years to partially compensate this reduction, but its not certain. .
The difficulty of the calculation (the required number of zeroes at the beginning of the hash string) is adjusted frequently, so that it takes 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 steady and diminishing flow of new coins until the maximum number of 21 million is reached (expected some time see this site in 2140).