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In 2009it was 50. In 2013, it was 25, at the time of writing it's 12.5, and sometime in the middle of 2020 it will halve to 6.25. .
At this speed 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 make.
Here is the catch. In order for bitcoin miners to actually earn bitcoin from verifying transactions, two things have to occur. To begin with, they must verify 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 stores.
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Second, in order to add a block of transactions to the blockchain, miners should solve a intricate 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 gamble. .
The difficulty level of the most recent block at the time of writing is about 7,184,404,942,701. That is, the chance of a pc producing a hash below the target is just 1 in 7,184,404,942,701 less than 1 in seven trillion. That level is adjusted every 2016 cubes, 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 off of this network, the difficulty adjusts downward to make mining easier. .
"Say I tell three friends that I'm thinking of a number between 1 and 100, and 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 simply must be the very first person to figure any number that's less than or equal to this number I'm 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's no'extra credit' for Friend B, even though B's answer was nearer to next the goal answer of 19. .
"Now imagine that I pose the'guess what number I am thinking of' question, however I am not asking just three 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 is going to be quite difficult to guess the right answer." .
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, 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 everything to do with how fast your computer can create hashes. Just a decade ago, bitcoin miners can be performed competitively on normal desktops. Over time, however, miners recognized that graphics cards commonly utilized for video games were more effective at mining than desktops and graphics processing units (GPU) came to dominate the game.
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These can run from $500 to the tens of thousands. .
Today, bitcoin mining is so competitive that it can only be done profitably using the latest up-to-date ASICs. When using desktop computers, GPUs, or elderly versions of ASICs, the expense of energy consumption actually exceeds the revenue generated. Even with the newest unit at your disposal, one computer is seldom enough to compete with exactly 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 high number of blocks 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 odds, scaling difficulty levels, and the huge network of consumers verifying transactions, one block of transactions is verified roughly every 10 minutes. But 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 every 10 minutes. Since 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.