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Instead, they went with Solution 2. The resulting currency, called 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 about 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 the bitcoins exist in the protocols design (like the gold exists underground), but they havent been brought out into the mild yet (just as the golden hasnt been dug up). 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 which runs the bitcoin software 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 also 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 which it knows, that will relay the information to nodes that they know, etc.. This way it ends up getting around the entire network fairly fast. .

Some nodes are mining nodes (usually referred to as miners). These set outstanding transactions into blocks and add them into the blockchain. How do they do so by solving a intricate mathematical mystery that is a portion 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 the information in the block and passed through a hash function, produces a result that's within a certain range.

(For trivia lovers, this number is called a nonce, which can be a concatenation of number employed once. In the case of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

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How can they find this number By guessing at random. The hash function which makes it impossible to predict exactly what the output will be. So, miners guess the mystery number and use the hash function to the combination of that guessed number and the data in the cube. The resulting hash must begin link with a pre-established number of zeroes.

Whats more, there might be several nonces that make 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 go figure out the puzzle number for your next one. As a reward for its work, the victorious miner has some new bitcoin. .

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

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Although its not nearly as cushy a bargain as it sounds. There are a lot of mining nodes competing for this benefit, and it's a question of luck 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 (if you have 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 bitcoins given as a reward for solving the puzzle will decrease. Its 12.5 now, however, it halves every four years or so (the next one is expected in 2020-21). The value of bitcoin relative to cost of electricity and hardware could go up over the next few years to partially compensate this reduction, but its not certain. .

The difficulty of the calculation (the required number of zeroes at the beginning of the hash string) is corrected frequently, so it takes on average approximately 10 minutes to process a block.

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