Cryptotrader Bot Fundamentals Explained
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 process to permit 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 bitcoin mining, you envisage coins being dug out of the ground. But bitcoin isnt physical, so why do we call it mining
Because its similar to gold mining in the bitcoins exist in the protocols design (like the gold exists underground), but they havent been introduced into the light yet (just as the gold 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 discuss nodes. A node is a powerful computer that runs the bitcoin applications and assists to keep bitcoin running by participating in the relay of information. Anyone can run a node, you simply download the bitcoin software (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 they know, etc.. That way it ends up getting around the entire 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 do they do so by solving a complex mathematical mystery that's 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 all the data in the cube and passed through a hash function, produces a result that is within a certain range.
How can they find this number By guessing at random. The hash function makes it impossible to predict what the output will be. So, miners suppose the puzzle number and apply the hash function to the combination of that guessed number and the information in the block. The resulting hash must begin with a pre-established number of zeroes.
Whats more, there may be several nonces that make the intended 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. All the other miners immediately stop work on that block and begin trying to find out the puzzle number for the next one. As a reward for its work, the victorious miner gets some new bitcoin. .
At the time of writing, the reward is 12.5 bitcoins, which in time of writing will be worth nearly $200,000.
Also, the costs of being a mining node are considerable, not only due to the effective hardware needed (if you've got a faster processor than your competitors, you've got a better chance of finding the right number before they perform ), but also because of the large amounts of power that running these chips consumes. .
And, the number of all bitcoins given as a reward for solving the puzzle will decrease. Its 12.5 now, but it halves every four decades or so (the next one is expected in 2020-21). The worth of bitcoin relative to price of electricity and hardware could go up during the next few decades to partially compensate this reduction, but its not certain. .
The difficulty of the calculation (the necessary number of zeroes at the beginning of the hash string) is corrected frequently, so that it requires on average about 10 minutes to process a block.
Why 10 minutes that's the amount of time that the bitcoin developers think is necessary to get a steady and diminishing flow of new coins until the maximum number of 21 million has been attained (expected some time in 2140).