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Instead, they went with Solution 2. The resulting currency, known as bitcoin cash, increased the blocksize to 8 Mb in order to accelerate the verification procedure 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. However, 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 exists underground), but they havent been introduced into the light yet (just as the golden hasnt yet been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.

They get to do so as a reward for creating blocks of validated transactions and including them in the blockchain.

Backtracking a little, lets discuss nodes. A node is a powerful computer that 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 (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 a few nodes which it knows, who will relay the information to nodes they know, etc.. That way it ends up getting around the whole network fairly quickly. .

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 mystery that is part of this bitcoin program, and including the answer in the cube. The mystery that needs solving is to find a number that, when combined with all the information in the cube and passed via a hash function, creates a result that's within a certain range.

(For trivia lovers, this number is called a nonce, which can be a concatenation of number used once. In you can check here the case 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 which makes it impossible to predict what the outcome will be. So, miners suppose the mystery number and apply the hash function to the combination of the guessed number and also the data in the cube. The resulting hash must begin 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 with a different block configuration). .

The first miner to get 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 mystery number for the why not try here next one. As a reward for the own work, the victorious miner gets some new bitcoin. .

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

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

Also, the costs of being a mining node are considerable, not only due to the powerful hardware needed (in case you've got a faster processor than your competitors, you have a better chance of finding the right number before they do), but also because of the large amounts of power that running these processors consumes. .

And, the number of all bitcoins given as a reward for solving the puzzle will decrease. Its 12.5 now, but it pits each 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 over the next few decades to partly compensate this reduction, but its not certain. .

The difficulty of the calculation (the necessary 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 programmers think is necessary to get a continuous and diminishing flow of new coins until the maximum number of 21 million is reached (expected some time in 2140).