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Instead, they went with Solution 2. The resulting currency, called bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification procedure to permit a performance of around two 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 similar to gold mining in that the bitcoins exist in the protocols design (like the gold exists underground), but they havent been introduced into the light yet (just as the golden hasnt yet been awakened ). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.
They get to perform this as a reward for creating blocks of confirmed 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 just 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 carries 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.. That way it ends up getting around the entire network fairly quickly. .
Some nodes are mining nodes (usually known as miners). These set outstanding transactions into cubes and add them into the blockchain. How do they do this By solving a intricate mathematical mystery that is a portion of the bitcoin app, and including the answer in the block. The puzzle that needs solving is to find a number that, when combined with all the data in the cube and passed through a hash function, produces a result that is within a certain range.
How do they find this number By guessing at random. The hash function which makes it impossible to forecast 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 might be several nonces that make the desired 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 remainder of the network. The rest of the miners immediately stop work on that block and start trying to figure out the mystery number for the next one. As a reward for the own work, the victorious miner has some new bitcoin. .
In the time of writing, the reward is 12.5 bitcoins, which in time of writing will be worth almost $200,000.
Also, the look these up costs of being a mining node are considerable, not only because of the powerful hardware needed (if 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 processors 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 decades to partially compensate this reduction, but its not certain. .
The problem of the calculation (the necessary number of zeroes at the beginning of the hash string) is adjusted frequently, so it requires on average about 10 minutes to process a block.
Why 10 minutes that's the amount of time that the bitcoin programmers think is necessary for a continuous and diminishing flow of new coins until the maximum number of 21 million has been attained (expected some time in 2140).