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In 2009, it was 50. In 2013, it was 25, at the time of writing it is 12.5, and sometime in the middle 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 precious over time but also more expensive for miners to produce.

Here's the catch. In order for bitcoin miners to really earn bitcoin from verifying transactions, two things have to happen. First, they need to confirm 1 megabyte (MB) value of transactions, which can theoretically be as small as 1 transaction but are far more often several thousand, depending on how much data each transaction stores.

 

 

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Second, in order to put in a block of transactions to the blockchain, miners must fix a complex computational math problem, also called a"proof of work." What they're doing is trying to think of 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's a bet. .

The difficulty level of the most recent block at the time of writing is about 7,184,404,942,701. In other words, the chance of a computer producing a hash beneath the goal is 1 in 7,184,404,942,701 less than 1 in 7 trillion. That level is adjusted every 2016 blocks, or about every two weeks, with the aim of keeping rates of mining constant.

 

 

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The reverse is also correct. If computational power has been taken from this network, the problem adjusts downward to earn mining simpler. .

 

 

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"Say I tell three friends I'm thinking of a number between 1 and 100, and I write that number on a sheet of paper and seal it in an envelope. My friends don't need to guess the exact number, they just must be the very first person to figure any number that's less than or equal to this number I am thinking of.

"Let's say I'm thinking about the number 19. If Friend A guesses 21they shed because 21>19. If Friend B supposes 16 and Friend C supposes 12, then they have both theoretically arrived at workable 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 pose the'guess what number I am thinking of' question, however I am not asking just 3 friends, and I'm not thinking of a number between 1 and 100. Rather, I'm asking the original source millions of prospective miners and I'm thinking about a 64-digit hexadecimal number. Now you see that it is going to be extremely hard to guess the right answer." .

If 1 in 7 trillion doesn't sound difficult enough as is, here is the catch to the grab. Not only do bitcoin miners need to think of the ideal hash, but they also have to be the first to perform it.

 

 

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Since bitcoin mining is essentially guesswork, arriving at the right answer before another miner has everything to do with how fast your computer can create hashes. Just a decade ago, bitcoin miners could be carried out competitively on normal desktops. Over time, however, miners realized that graphics cards commonly used for video games tend to be 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 it can only be done profitably using all the most up-to-date ASICs. When using desktop computers, GPUs, or older models of ASICs, the cost of energy consumption actually surpasses the revenue generated. Even with the newest unit at your disposal, one pc is seldom enough to compete with exactly what miners call"mining pools" .

A mining pool is a group of miners who combine their computing power and split the mined bitcoin between participants. A disproportionately large number of cubes are mined by pools rather than by individual miners. In July 2017, mining pools and companies represented roughly 80% to 90 percent of bitcoin computing power. .

 

 

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Between 1 in 7 trillion chances, scaling difficulty levels, and also the huge network of users verifying transactions, one block of transactions is confirmed roughly every 10 minutes. But its important to keep in mind that 10 minutes is a goal, not a guideline.

 

 

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The bitcoin network can process about seven transactions per second, with transactions being logged in the blockchain each 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.

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