A Biased View of Free Bitcoin Mining Game
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 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 from the ground. However, bitcoin isnt physical, so why do we call it mining
Since its similar to gold mining in that the bitcoins exist in the protocols design (just as the gold is underground), but they havent been brought out into the light yet (like the golden hasnt yet been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.
They get to do so as a reward for creating cubes 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 applications and helps keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin applications (free) and 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 some nodes that it knows, that will relay the information to nodes that they know, etc.. This 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 cubes 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 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, creates 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.)
How do they find this number By guessing at random. The hash function which makes it impossible to predict exactly what the outcome will be. So, miners guess the mystery number and use the hash function to the combination of that guessed number and also the data in the cube. The resulting hash must begin with a pre-established number of see post zeroes.
Whats more, there might be several nonces that produce the intended result, or there may 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 desirable 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 mystery number for your next one. As a reward for its own work, the victorious miner gets some new bitcoin. .
At the time of writing, the payoff is 12.5 bitcoins, which at time of writing is worth almost $200,000.
Though its not nearly as cushy a bargain as it sounds. There are a lot of mining nodes competing for that benefit, and it's 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 due to the effective hardware needed (if you have a faster processor than your competitors, you've got a better visit this site chance of finding the right number before they do), but also because of the large amounts of electricity that running these processors consumes. .
And, the number of all bitcoins given as a reward for solving the mystery will decrease. Its 12.5 now, however, it pits each four decades or so (the next one is anticipated in 2020-21). The value of bitcoin relative to cost of electricity and hardware could go up over the next few years to partially compensate this reduction, but its not certain. .
The difficulty of the calculation (the required number of zeroes at the beginning of the hash string) is adjusted frequently, so that it takes on average about 10 minutes to process a block.
Why 10 minutes that's the amount of time the bitcoin programmers think is necessary for a steady and diminishing flow of new coins until the highest number of 21 million has been attained (anticipated some time in 2140).