Big Coins - Questions
In 2009it was 50. In 2013, it was 25, in the time of writing it's 12.5, and sometime in the center of 2020 it will halve to 6.25. .
At this rate of halving, the entire number of bitcoin in circulation will approach a limit of 21 million, making the currency more scarce and valuable over time but also more expensive for miners to make.
Here's the catch. In order for bitcoin miners to actually earn bitcoin from verifying transactions, two things have to happen. First, they need to confirm 1 megabyte (MB) worth of transactions, which can theoretically be as small as 1 transaction but are more often several thousand, depending on how much data each transaction shops.
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Second, in order to add a block of transactions to the blockchain, miners should solve a intricate computational science difficulty, also called a"proof of work." What they're doing is trying to come up with a 64-digit hexadecimal number, called a"hash," that is less than or equivalent to the target hash.
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In other words, it is a gamble. .
The difficulty level of the most recent block at the time of writing is all about 7,184,404,942,701. In other words, the chance of a computer producing a hash below the target is 1 in 7,184,404,942,701 less than 1 in 7 trillion. That level is corrected every 2016 cubes, or about every two weeks, with the aim of keeping rates of mining constant.
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The opposite is also correct. If computational power is taken from the network, the difficulty adjusts downward to make mining easier. .
"Say I tell three friends I'm thinking about a number between 1 and 100, and that I write that number on a piece of paper and seal it in an envelope. My friends don't need to guess the exact number, they simply must be the very first person to guess any number that's less than or equal to the number I'm thinking of.
"Let's say I'm thinking about the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B supposes 16 and Friend C guesses 12, then they've both technically came at viable answers, since 16<19 and 12<19. There is no'extra credit' for Friend B, even though B's answer was closer to the target answer of 19. .
"Now imagine that I present the'guess you could try this out what number I'm thinking of' question, but I'm not asking just 3 friends, and I am not thinking of a number between 1 and 100. Instead, I am asking millions of prospective miners and I'm thinking about a 64-digit hexadecimal number. Now you see that it is going to be extremely difficult to guess the ideal answer." .
If 1 in 7 trillion doesn't sound difficult enough as is, here's the catch to the grab. Not only do bitcoin miners have to think of the right hash, they also must be the first to do it.
Because bitcoin mining is essentially guesswork, arriving at the ideal answer before another miner has everything to do with how fast your computer can create hashes. Only a decade ago, bitcoin miners could be performed competitively on normal desktop computers. Over time, however, miners realized that pictures cards commonly used for video games were more capable of mining than desktops and graphics processing units (GPU) came to dominate the game.
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These can run from $500 into the tens of thousands. .
Nowadays, bitcoin mining is so aggressive that it can only be done profitably with all the latest up-to-date ASICs. When using desktop computers, GPUs, or elderly models of ASICs, the cost of energy consumption actually exceeds the revenue generated. Even with the newest unit available, one pc is seldom enough to compete with what what miners call"mining pools" .
An mining pool is a group of miners that combine their computing ability and split the mined bitcoin between participants. A disproportionately large number of cubes are mined by pools rather read than by individual miners. In July 2017, mining pools and companies represented approximately 80% to 90% of bitcoin computing power. .
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Between 1 in 7 trillion odds, scaling difficulty levels, and also the massive network of consumers verifying transactions, one block of transactions is verified roughly every 10 minutes. But its important to keep in mind that 10 minutes is a goal, not a rule.
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The bitcoin network can process about seven transactions per second, with transactions being logged in the blockchain every 10 minutes. As the network of bitcoin consumers continues to grow, however, the number of transactions made in 10 minutes will eventually exceed the number of transactions which can be processed in 10 minutes.