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Insteadthey went with Solution 2. The resulting currency, known as bitcoin cash, increased the blocksize to 8 Mb in order to accelerate the verification process 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

Because its like gold mining in the bitcoins exist in the protocols design (just as the gold is underground), but they havent been brought out into the mild yet (like the golden hasnt 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 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 assists to keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin software (free) and also leave a certain port open (the downside is 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 that it knows, who will relay the information to nodes that they know, etc.. This way it ends up getting around the entire network fairly fast. .

Some nodes are mining nodes (usually referred to as miners). These group outstanding transactions into blocks and add them into the blockchain. How do they do this By solving a intricate mathematical mystery that's part of this bitcoin app, and including the answer in the cube. The puzzle that needs solving is to find a number which, when combined with the data in the block and passed via a hash function, creates a result that's within a certain range.

(For trivia lovers, this number is called a nonce, which is a concatenation of number employed once. In the instance of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

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How can they find this number By guessing at random. The hash function which makes it impossible to predict what the outcome will be. So, miners guess the puzzle number and apply the hash function to the combination of the guessed number and also the information in the cube. The resulting hash has to begin with a pre-established number of zeroes.

Whats more, there may be several nonces that make the desired result, or there may 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 desirable range announces its victory to the rest of the network. All the other miners immediately stop work on that block and start trying to find out the puzzle number for the next one. As a reward for the work, the victorious miner gets some new bitcoin. .

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

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Although its not nearly as cushy a bargain as it sounds. There are a lot of mining nodes competing for that benefit, and it is a question of luck and computing power (the check that further guessing calculations you can execute, the luckier you're ).

Also, the costs of being a mining node are considerable, not only because of the effective hardware needed (if you have a faster processor than your competitors, you have 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, but it pits each four decades or so (the next one is expected in 2020-21). The value of bitcoin relative to price of electricity and hardware could go 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 it takes on average about 10 minutes to process a block.

Why 10 minutes That is the amount of time that the bitcoin developers think is necessary for a continuous and diminishing flow of new coins until the maximum number of 21 million has been attained (anticipated some time in 2140).