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In other words, it's a gamble. .
The opposite is also correct. If computational power has been taken off of the network, the problem adjusts downward to earn mining easier. .
"Say I tell three friends that 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 specific number, they just must be the very first person to guess any number that's less than or equal to the number I am thinking of.
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"Let us say I am thinking of the number 19. If Friend A guesses 21, they shed because 21>19. If Friend B supposes 16 and Friend C guesses 12, then they've both theoretically arrived 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 goal answer of 19. .
"Now imagine that I pose the'guess what number I'm thinking of' question, however I'm not asking just three friends, and I am not thinking of a number between 1 and 100. Rather, I'm asking millions of prospective miners and I am thinking about a 64-digit hexadecimal number. Now you see that it is going to be extremely hard to guess the ideal answer." .
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If 1 in 7 trillion doesn't sound difficult enough as is, here is the grab to the grab. Not only do bitcoin miners need to think of the ideal hash, they also have to be the first to do it.
Because bitcoin mining is essentially guesswork, arriving at the right answer before another miner has almost everything to do with how fast your computer can create hashes. Just a decade ago, bitcoin miners could be carried out competitively on normal desktop computers. As time passes, however, miners realized that graphics cards commonly used for video games tend to be more effective at mining than desktops and graphics processing units (GPU) came to dominate the game.
These can run from $500 to the tens of thousands. .
Nowadays, bitcoin mining is so competitive that it can only be done profitably using 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 computer is rarely enough to compete with what what miners call"mining pools." .
An mining pool is a group of miners who combine their computing ability and split the mined bitcoin between participants. A disproportionately high number of blocks are mined by pools rather than by individual miners. In July 2017, mining pools and companies represented approximately 80% to 90% of bitcoin computing power. .
Between 1 in 7 trillion chances, scaling difficulty levels, and the huge network of consumers verifying transactions, one block of transactions is verified roughly every 10 minutes. However, 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 every 10 minutes. Since the network of bitcoin users 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.
This dilemma at the heart of the bitcoin protocol is known as scaling. Even though bitcoin miners generally agree that something must be done in order to address scaling, there is less consensus regarding how can it. At the time of writing, there are two big solutions to this scaling problem, either (1) to lower the amount of data needed to confirm each block or (2) to increase the number of transactions that each block can save.
Solution 2 will my latest blog post deal with scaling by allowing for much more information to be processed every 10 minutes. .
In July 2017, bitcoin miners and mining companies representing approximately 80% to 90% of the networks computing electricity voted to incorporate a program that would find more reduce the amount of information needed to confirm each block. In other words, they went with Solution 1.
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The app which miners voted to add to the bitcoin protocol is known as a segregated witness, or SegWit. This expression is an amalgamation of Segregated, meaning to different, and Witness, which refers to signatures on a bitcoin transaction. Segregated Witness, then, means to separate transaction signatures out of a block and join them within an extended block.