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Instead, they went with Solution 2. The resulting currency, called 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 bitcoin mining, you envisage coins being dug out of the ground. However, 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 is 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 cubes 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 to keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin software (free) and leave a certain port open (the drawback is 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 which it knows, who will relay the information to nodes that they know, etc.. That way it ends up getting around the whole network pretty quickly. .

Some nodes are mining nodes (usually referred to as miners). These set outstanding transactions into cubes and add them into the blockchain. How can they do so by solving a intricate mathematical mystery that is part of the bitcoin app, 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 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 can be a concatenation of number used once. In the case of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

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How do they find this number By guessing at random. The hash function makes it impossible to predict exactly what the output will be. So, miners guess the puzzle number and apply the hash function to the combination of that guessed number and also the data in the block. The resulting hash must begin with a pre-established number of zeroes.

Whats more, there might be several nonces that produce the intended result, or there may be none (in which his comment is here case the miners keep trying, but using 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 begin trying to find out the mystery number for the next one. As a reward for its work, the victorious miner gets some new bitcoin. .

In the time of writing, the payoff is 12.5 bitcoins, which in time of writing is worth almost $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 this reward, and it's a question of luck and computing power (the further guessing calculations you can execute, the luckier you're ).

Also, the expenses of being a mining node are considerable, not only because of the effective hardware needed (if you've got a faster processor than your competitors, you have a better chance of finding the correct number before they perform ), but also due to the large amounts of power that running these chips 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 value of bitcoin relative to cost of power and hardware could extend up over the next few years to partly compensate this more reduction, but its not certain. .

The problem of the calculation (the required 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 the bitcoin developers think is necessary for a see this page steady and diminishing flow of new coins until the maximum number of 21 million is attained (anticipated some time in 2140).