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Instead, they 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 permit a performance of around 2 million transactions every 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

Since its like gold mining in the bitcoins exist in the protocols design (like the gold is underground), but they havent been introduced into the light yet (just as the gold 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 validated 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 assists 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, who will relay the information to nodes they know, etc.. This way it ends up getting around the entire network pretty fast. .

Some nodes are mining nodes (usually known as miners). These set outstanding transactions into cubes and add them into the blockchain. How do they do so by solving a complex mathematical puzzle that's part of this bitcoin program, and including the answer in the cube. The puzzle that needs solving is to find a number which, when combined with the data additional info in the block and passed through a hash function, produces 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 can they find this number By guessing at random. The hash function makes it impossible to predict exactly what the outcome will be. So, miners suppose the puzzle number and apply the hash function to the combination of that guessed number and the information in the cube. The resulting hash must start with a pre-established number of zeroes.

Whats more, there may be several nonces that produce the intended result, or there might be none (in which case the miners keep trying, but with a different block configuration). .

The first miner to acquire a resulting hash within the desirable range announces its victory to the rest of the network. All the other miners immediately cease work on that block and begin trying to figure out the mystery number for your next one. As a reward for the work, the victorious miner gets some new bitcoin. .

In the time of writing, the payoff is 12.5 bitcoins, which at time of writing is worth almost $200,000.

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Though its not nearly as cushy a bargain as it sounds. There are a whole lot of mining nodes competing for that reward, and it's a question of fortune and computing power (the more guessing calculations you can perform, the luckier you are).

Additionally, the expenses 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 have a better chance of finding the correct number before they perform ), but also due to 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, but it halves every four decades or so (the next one is expected in 2020-21). The value of bitcoin relative to price of electricity and hardware could go up during the next few decades 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 requires on average approximately 10 minutes to process a block.

Why 10 minutes that's the amount of time the bitcoin programmers think is necessary to get a steady and diminishing flow of new coins until the maximum number of 21 million has been reached (anticipated some time in 2140).

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