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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 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 out of 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 introduced into the light 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 this as a reward for creating cubes of confirmed transactions and including them in the blockchain.
Backtracking a little, lets talk about nodes. A node is a powerful computer that runs the bitcoin software and helps to keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin applications (totally free ) and leave a certain port open (the drawback is that it consumes energy and storage space the network at time of writing takes 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.. That way it ends up getting around the whole network pretty quickly. .
Some nodes are mining nodes (usually referred to as miners). These group outstanding transactions into blocks and add them into the blockchain. How can they do this By solving a complex mathematical puzzle that is part of the bitcoin program, and including the answer in the block. The puzzle that needs solving is to find a number which, when combined with all the information in the cube and passed via a hash function, produces a result that's within a certain range.
How do they find this number By guessing at random. The hash function makes it impossible to forecast exactly what the outcome will be. So, miners suppose the puzzle number and use the hash function to the combination of the guessed number and also the information in the block. 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 the event the miners keep trying, but with a different block configuration). .
The first miner to get a resulting hash within the desired range announces its success to the rest of the network. The rest of the miners immediately stop work on that block and begin trying to find out the mystery number for the next one. As a reward for its own 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 nearly $200,000.
Also, the costs of being a mining node are considerable, not only due to the effective hardware needed (if you've got a faster processor than your opponents, you have a better chance of finding the right number before they perform ), but also due to the large amounts of electricity that running these chips consumes. .
And, the number of bitcoins given as a reward for solving the mystery 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 price of electricity and hardware could go up over the next few decades to partly 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 adjusted 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 programmers think is necessary for a continuous and diminishing flow of new coins until the maximum number of 21 million has been reached (anticipated some time in 2140).