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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 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 like gold mining in that the bitcoins exist in the protocols design (like the gold is underground), but they havent been brought out into the light yet (like the gold hasnt yet 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 cubes 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 software and assists keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin applications (totally free ) and also 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 a few nodes that it knows, that will relay the information to nodes that they know, etc.. This way it ends up getting around the whole network pretty quickly. .
Some nodes are mining nodes (usually referred to as miners). These set outstanding transactions into cubes and add them to the blockchain. How can they do so by solving a intricate mathematical mystery that's part of this bitcoin app, and including the answer in the cube. The puzzle that needs solving is to find a number that, when combined with the information in the block and passed via a hash function, produces a result that's within a certain range.
How can they find this number By guessing at random. The hash function which makes it impossible to predict what the output will be. So, miners suppose the mystery number and apply review the hash function to the combination of that guessed number and the information in the cube. The resulting hash has to 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 using a different block configuration). .
The first miner to acquire a resulting hash within the desired range announces its victory to the rest of the network. All the other miners immediately stop work on that block and begin trying to find out the puzzle number for your next one. As a reward for the own work, the victorious miner gets some new bitcoin. .
At the time of writing, the reward is 12.5 bitcoins, which at time of writing is worth nearly $200,000.
Additionally, the costs of being a mining node are considerable, not only due to the effective hardware needed (in case try this website you have 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 electricity that running these chips consumes. .
And, the number of bitcoins awarded 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 worth of bitcoin relative to price of electricity and hardware could extend up during the next few years to partially compensate this reduction, but its not certain. .
The problem of the 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 that the bitcoin developers think is necessary for a steady and diminishing flow of new coins until the highest number of 21 million has been reached (expected some time in 2140).