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Insteadthey 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 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 like gold mining in that the bitcoins exist in the protocols design (just as the gold is underground), but they havent been introduced into the light yet (just as the golden hasnt 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 bit, lets talk about 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 simply download the bitcoin software (free) and also leave a certain port open (the drawback 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 a few nodes which it knows, who 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 referred to 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 a portion of the bitcoin app, and including the answer in the block. 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, creates a result that is within a certain range.

(For fiction fans, this number is known as a nonce, which is a concatenation of number employed once. In the case 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 makes it impossible to predict what the output will be. So, miners suppose the puzzle number and use the hash function to the combination of the guessed number and the data in the block. The resulting hash has to start 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 which case the miners keep trying, but with a different block configuration). .

The first miner to acquire a resulting hash within the desirable range announces its success to the rest of the network. All the other miners immediately stop work on that block and begin trying to figure out the mystery number for the next one. As a reward for the own work, the victorious miner gets some new bitcoin. .

At the time important site of writing, the payoff is 12.5 bitcoins, which in time of writing will be worth nearly $200,000.

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

Also, the expenses of being a mining node are considerable, not only due to 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 electricity that running these chips consumes. .

And, the number of all bitcoins awarded 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 value of bitcoin relative to price of electricity and hardware could extend up during the next few years to partly compensate this reduction, but its not certain. .

The difficulty of this calculation (the required 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 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 (expected some time in 2140).