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Insteadthey went with Solution 2. The resulting currency, called bitcoin cash, increased the blocksize to 8 Mb in order to accelerate the verification process to permit a performance of around 2 million transactions every 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 from the ground. But bitcoin isnt physical, so why do we call it mining
Because its like gold mining in the bitcoins exist in the protocols design (just as the gold exists underground), but they havent been brought out into the mild yet (just as the gold hasnt been dug up). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.
They get to perform this as a reward for creating cubes 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 applications and helps to keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin software (totally free ) and leave a certain port open (the downside 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, that will relay the information to nodes that they know, etc.. That way it ends up getting around the entire network pretty quickly. .
Some nodes are mining nodes (usually referred to as miners). These group outstanding transactions into blocks and add them to the blockchain. How can they do this By solving a complex mathematical mystery that is part of this bitcoin program, and including the answer in the cube. The puzzle that needs solving is to find a number that, when combined with the data in the cube and passed through a hash function, produces find out a result that is within a certain range.
How can they find this number By guessing at random. The hash function makes it impossible to predict exactly what the output will be. So, miners guess the puzzle number and apply the hash function to the combination of that guessed number and the information in the block. The resulting hash must start with a pre-established number of zeroes.
Whats more, there may be several nonces that make the desired result, or there might be none (in the event the miners keep trying, but with a different block configuration). .
The first miner to acquire a resulting hash within the desired range announces its success to the remainder of the network. All the other miners check out this site immediately cease work on that block and begin trying to find out the puzzle number for the next one. As a reward for the 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 will be worth almost $200,000.
Also, the expenses of being a mining node are considerable, not only because of the effective hardware needed (in case you've got a faster processor than your opponents, you have a better chance of finding the right number before they perform ), but also because of the large amounts of power that running these chips consumes. .
And, the number of all bitcoins given as a reward for solving the mystery 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 cost of electricity and hardware could extend up during the next few years to partly compensate this reduction, but its not certain. .
The problem of this calculation (the necessary number of zeroes at the beginning of the hash string) is adjusted frequently, so that it requires 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 continuous and diminishing flow of new coins until the maximum number of 21 million is attained (anticipated some time in 2140).