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Insteadthey 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 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 from the ground. But bitcoin isnt physical, so why do we call it mining

Because its like 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 mild yet (like the golden hasnt been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.

They get to perform 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 applications and helps to keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin applications (totally free ) and also 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 that it knows, who will relay the information to nodes they know, etc.. That way it ends up getting around the whole network fairly fast. .

Some nodes are mining nodes (usually referred to as miners). These group outstanding transactions into cubes and add them to the blockchain. How can they do so by solving a complex mathematical puzzle that is part of the 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 data in the cube and passed through a hash function, creates a result that's within a certain range.

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(For fiction fans, this number is known as a nonce, which can be a concatenation of number used once. In the case of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

How do they find this number By guessing at random. The hash function makes it impossible to forecast exactly what the outcome will be. So, miners guess 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 may be several nonces that produce the desired result, or there may 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 desired range announces its victory to the remainder of the network. The rest of the miners immediately cease work on that block and start trying to find out the mystery number for the next one. As a reward for the own work, the victorious miner gets some new bitcoin. .

In 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 deal as it sounds. There are a lot of mining nodes competing for this reward, and it's a question of fortune and computing power (the more guessing calculations you can execute, the luckier you are).

Additionally, the expenses of being a mining node are considerable, not only due to the effective hardware needed (in case you've got a faster processor than your competitors, you have a better chance of finding the correct number before they do), but also because of the large amounts of power that running these chips 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 cost of power and hardware could go up over the next few years 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 approximately 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 highest number of 21 million is helpful site reached (expected some time in 2140).

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