X11 Cryptocurrency Fundamentals Explained
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. 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. But bitcoin isnt bodily, so why do we call it mining
Since its similar to gold mining in that the bitcoins exist in the protocols design (like the gold is underground), but they havent been brought out 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 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 assists to keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin applications (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 takes up about 145GB).
One node will send information to some nodes which 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 referred to as miners). These set outstanding transactions into blocks and add them to the blockchain. How can they do so by solving a complex mathematical mystery that's part of this bitcoin program, and including the answer in the cube. The puzzle that needs solving is to find a number which, when combined with all the data in the cube and passed via a hash function, creates a result that is within a certain range.
How can they find this number By guessing at random. The hash function which makes it impossible to predict what the output will be. So, miners guess the puzzle number and use the hash function to the combination of that guessed number and the information in the cube. 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 may be none (in the event 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. The rest of the miners immediately cease work on that block and begin trying to find out the mystery number for the next one. As a reward for its work, the victorious miner gets some new bitcoin. .
At the time of resource writing, the reward is 12.5 bitcoins, which at time of writing is worth almost $200,000.
Also, the expenses 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 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 anticipated in 2020-21). The value of bitcoin relative to price of electricity and hardware could extend up over the next few years 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 corrected frequently, so that it requires on average approximately 10 minutes to process a block.
Why 10 minutes That is the amount of time the bitcoin programmers think is necessary to get a steady and diminishing flow of new coins until the highest number of 21 million has been reached (expected some time in 2140).