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Instead, they went with Solution 2. The resulting currency, known as bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification process to allow a performance of around two 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. But bitcoin isnt physical, so why do we call it mining

Because its like gold mining in that the bitcoins exist in the protocols design (like the gold is 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 so as a reward for creating blocks of validated 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 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 a few nodes that it knows, who will relay the information to nodes they know, etc.. That way it ends up getting around the whole network pretty fast. .

Some nodes are mining nodes (usually known as miners). These group outstanding transactions into cubes and add them to the blockchain. How can they do so by solving a complex mathematical mystery that's part 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 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 used 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 outcome will be. So, miners guess the mystery number and use 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 produce the intended result, or there might 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 from this source desirable range announces its success to the rest of the network. The rest of the miners immediately cease work on that block and start trying to figure out the puzzle number for the next one. As a reward for the own work, the victorious miner gets some new bitcoin. .

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

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Although its not nearly as cushy a deal as it sounds. There are a whole lot of mining nodes competing for that reward, and it's a question of fortune and computing power (the more guessing calculations you can execute, the luckier you're ).

Additionally, 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've got a better chance of finding the right number before they perform ), but also because of the large amounts of electricity 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, however, it halves every 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 decades 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 corrected frequently, so that it takes on average about 10 minutes to process a block.

Why 10 minutes That is the amount of time the bitcoin developers 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).