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Insteadthey went with Solution 2. The resulting currency, called bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification procedure to allow a performance of around two million transactions per 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. 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 (like the golden hasnt yet 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 which runs the bitcoin software and assists to keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin software (free) and leave a certain port open (the drawback is the fact 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 quickly. .

Some nodes are mining nodes (usually known as miners). These set outstanding transactions into blocks and add them to the blockchain. How can they do so by solving a complex mathematical puzzle that's part of the bitcoin app, and including the answer in the cube. The mystery that needs solving is to find a number that, when combined with the data in the cube and passed via a hash function, produces a result that is within a certain range.

(For trivia lovers, this number is known as 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 do they find this number By guessing at random. The hash function makes it impossible to predict what the output will be. So, miners check this suppose the puzzle number and apply the hash function to the combination of the guessed number and the data in the cube. The resulting hash must start with a pre-established number of zeroes.

Whats more, there may be several nonces that make the intended result, or there might 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 success to the remainder of the network. All the other miners immediately cease work on that block and begin trying to find out the puzzle number for your next one. As a reward for its work, the victorious miner has some new bitcoin. .

In 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 bargain as it sounds. There are a lot of mining nodes competing for this benefit, and it is a question of fortune and computing power (the further guessing calculations you can perform, the luckier you are).

Also, the expenses of being a mining node are considerable, not only because of the effective hardware needed (if you've got a faster processor than your opponents, you have a better chance of finding the correct number before they do), but also because of the large amounts of electricity that running these processors consumes. .

And, the number of bitcoins awarded as a reward for solving the puzzle will decrease. Its 12.5 now, but 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 during 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 corrected frequently, so that it requires on average about 10 minutes to process a block.

Why 10 minutes That is 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 has been reached (anticipated some time in 2140).