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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 procedure to permit a performance of around two million transactions every day. At 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 out of 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 introduced into the light yet (like the golden hasnt yet 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 bit, lets talk about nodes. A node is a powerful computer which runs the bitcoin applications and helps keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin applications (totally free ) and leave a certain port open (the downside 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 they know, etc.. That 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 cubes and add them into the blockchain. How do they do so by solving a complex mathematical puzzle that is part of this bitcoin program, and including the answer in the block. The puzzle that needs solving is to find a number which, when combined with the information in the block and passed via a hash function, creates a result that's within a certain range.

(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.)

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How do they find this number By guessing at random. The hash function makes it impossible to predict what the output will be. So, miners suppose the puzzle number and use the hash function to the combination of that guessed number and the data in the block. The resulting hash has to start with a pre-established number of zeroes.

Whats more, there might be several nonces that produce the intended result, or there may 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 desired range announces its victory to the remainder of the network. All the other miners immediately stop work on that block and start trying to figure out the mystery number for your next one. As a reward for the own work, the victorious miner has some new bitcoin. .

In the time of writing, the reward is 12.5 bitcoins, which in 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 that reward, and it is a question of luck and computing power (the further guessing calculations you can perform, the luckier you're ).

Additionally, the expenses of being a mining node are considerable, not only because of the powerful hardware needed (if you've got a faster processor than your opponents, you've got a better chance of finding the right number before they do), but also because of 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, however, it pits each four decades or so (the next one is expected in 2020-21). The value of bitcoin relative to price of power and additional info hardware could extend up during the next few decades to partially 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 it takes on average about 10 minutes to process a block.

Why 10 minutes that's the amount of time the bitcoin developers think is necessary for a steady and diminishing flow of new coins until the highest number of 21 million is reached (anticipated some time in 2140).