X11 Cryptocurrency for Dummies
Instead, they went with Solution 2. The resulting currency, called bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification process to allow a performance of around 2 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 from the ground. However, bitcoin isnt bodily, so why do we call it mining
Since its like gold mining in the bitcoins exist in the protocols design (just as 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 perform so as a reward for creating blocks of validated transactions and including them in the blockchain.
Backtracking a bit, lets talk about nodes. A node is a powerful computer that runs the bitcoin software and helps keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin software (totally 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 a few nodes that it knows, who will relay the information to nodes that they know, etc.. That way it ends up getting around the entire network pretty quickly. .
Some nodes are mining nodes (usually known as miners). These group outstanding transactions into cubes and add them to the blockchain. How do they do so by solving a complex mathematical mystery that is part of this bitcoin program, and including the answer in the cube. The mystery that needs solving is to find a number that, when combined with the data in the cube and passed through a hash function, creates a result that's within a certain range.
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 puzzle number and apply the hash function to the combination of the guessed number and the information in the block. The resulting hash must start with a pre-established number of zeroes.
Whats more, there might be several nonces that produce the desired result, or there might be none (in which case the miners keep trying, but with 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. All the other miners immediately stop work on that block and start trying to find out the mystery number for your next one. As a reward for the own work, the victorious miner has some new bitcoin. .
At the time of writing, the payoff is 12.5 bitcoins, which at time of writing is worth almost $200,000.
Also, the costs of being a mining node are considerable, not only because of the powerful hardware needed (if you have 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 electricity that running these processors consumes. .
And, the number of bitcoins awarded as a reward for solving the puzzle will decrease. Its 12.5 now, but it halves every four years or so (the next one is expected in 2020-21). The worth of bitcoin relative to price of power and find more hardware could go up over the next few years to partly compensate this reduction, but its content 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 approximately 10 minutes to process a block.
Why 10 minutes that's the amount of time the bitcoin developers think is necessary for a continuous and diminishing flow of new coins until the highest number of 21 million has been attained (expected some time in 2140).