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Instead, they went with Solution 2. The resulting currency, called bitcoin cash, increased the blocksize to 8 Mb in order to accelerate the verification process to allow a performance of around two million transactions every 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. However, bitcoin isnt physical, so why do we call it mining

Because its similar to gold mining in that the bitcoins exist in the protocols design (just as the gold exists underground), but they havent been brought out into the light yet (like the gold hasnt been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.

They get to do this 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 just download the bitcoin software (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 that it knows, who will relay the information to nodes that they know, etc.. This way it ends up getting around the entire network pretty fast. .

Some nodes are mining nodes (usually referred to as miners). These group outstanding transactions into blocks and add them into the blockchain. How do they do this 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 which, when combined with the information in the block and passed through a hash function, creates a result that is within a certain range.

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(For trivia lovers, this number is known as a nonce, which is a concatenation of number employed once. In the instance 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 forecast exactly what the outcome will be. So, miners suppose the mystery number and apply the hash function to the combination of that 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 might be several nonces that make the intended result, or there might be none (in which case the miners keep trying, but using a different block configuration). .

The first miner to acquire 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 begin trying to figure out the mystery number for the next one. As a reward for its own work, the victorious miner has some new bitcoin. .

At the time of writing, the reward is 12.5 bitcoins, which at time of writing is worth nearly $200,000.

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Though its not nearly as cushy a bargain as it sounds. Discover More Here There are a whole lot of mining nodes competing for that reward, and it is a question of fortune and computing power (the further guessing calculations you can execute, 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 have 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 power that running these chips consumes. .

And, the number of all 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 value of bitcoin relative to cost of electricity and hardware could go up over the next few decades to partly compensate this reduction, but its not certain. .

The problem of this calculation (the required 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 the bitcoin developers think is necessary to get a continuous and diminishing flow of new coins until the maximum number of 21 million is attained (anticipated some time in 2140).

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