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In other words, it is a gamble. .
The reverse is also true. If computational power has been taken off of this network, the difficulty adjusts downward to earn mining easier. .
"Say I tell three friends I'm thinking about 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 simply must be the very first person to figure any number that's less than or equal to the number I'm thinking of.
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"Let's say I'm thinking about the number 19. If Friend A guesses 21they shed because 21>19. If Friend B guesses 16 and Friend C supposes 12, then they've both technically came at viable answers, because 16<19 and 12<19. There's 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 what number I am thinking of' question, however I'm not asking only 3 friends, and I'm not thinking of a number between 1 and 100. Rather, I am asking millions of prospective miners and I'm thinking about a 64-digit hexadecimal number. Now you see that it's going to be extremely difficult to guess the ideal answer." .
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If 1 in 7 trillion doesn't sound hard enough as is, here's the catch to the grab. Not only do bitcoin miners need to think of the ideal hash, but they also have to be the very first to do it.
Since bitcoin mining is essentially guesswork, arriving at the right answer before another miner has almost everything to do with how fast your computer can produce hashes. Just a decade ago, bitcoin miners can be performed competitively on normal desktop computers. Over time, however, miners realized that graphics cards commonly used for video games were more effective at mining than desktops and graphics processing units (GPU) came to dominate the match.
These can run from $500 into the tens of thousands. .
Nowadays, bitcoin mining is so aggressive 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 surpasses the revenue generated. Even with the newest unit available, one computer is rarely enough to compete with what what miners call"mining pools" .
A mining pool is a group of miners that combine their computing ability and split the mined bitcoin between participants. A disproportionately high number of cubes are mined by pools go to these guys rather than by individual miners. In July 2017, mining pools and companies represented approximately 80% to 90 percent of bitcoin computing power. .
Between 1 in 7 trillion chances, scaling difficulty levels, and also the huge network of users verifying transactions, one block of transactions is verified roughly every 10 minutes. However, its important to remember that 10 minutes is a target, not a rule.
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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 users continues to grow, however, the number of transactions made in 10 minutes will eventually exceed the number of transactions that can be processed in 10 minutes.
This issue at the center of the bitcoin protocol is known as scaling. While bitcoin miners generally agree that something has to be done in order to address scaling, there is less consensus regarding how do it. In the time of writing, there are two major solutions to this scaling problem, either (1) to decrease the amount of information needed to verify each block or (2) to increase the number of transactions that every block can store.
Solution 2 will 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 percent of the networks computing electricity voted to incorporate a program that will decrease the amount of data 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 called a segregated witness, or SegWit. This term is an amalgamation of Segregated, meaning to separate, 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.