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In other words, it is a bet. .
The reverse is also correct. If computational power is taken off of this network, the difficulty adjusts downward to earn mining simpler. .
"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 specific number, they just must be the very first person to figure any number that is less than or equal to the number I'm thinking of.
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"Let us say I am thinking about the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B guesses 16 and Friend C guesses 12, then they've 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 the goal answer of 19. .
"Now imagine that I pose the'guess what number I'm thinking of' question, but I'm not asking only three friends, and I am not thinking of a number between 1 and 100. Instead, I'm asking millions of prospective miners and I'm thinking of a 64-digit hexadecimal number. Now you see that it's going to be quite hard 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 have to come up with the ideal hash, but they also must be the first to do it.
Since 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 can be performed competitively go to website on normal desktop computers. 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 match.
These can run from $500 to the tens of thousands. .
Today, bitcoin mining is so aggressive it can only be done profitably using all the latest up-to-date ASICs. When using desktop computers, GPUs, or older versions 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" .
An mining pool is a group of miners who combine their computing power and split the mined bitcoin between participants. A disproportionately high 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. .
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 remember 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. Since the network of bitcoin users continues to grow, but 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. While bitcoin miners generally agree that something must be done in order to address scaling, there is less consensus regarding how do it. At the time of writing, there are two big solutions to the scaling problem, either (1) to lower the amount of information needed to verify each block or (2) to increase the number of transactions that each block can save.
Solution 2 would cope with scaling by allowing for more information to be processed every 10 minutes. .
In July 2017, bitcoin miners and mining companies representing approximately 80% to 90% of their networks computing power voted to incorporate a program that would reduce the amount of data needed to verify each block. That is, they went with Solution 1.
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The program which miners voted to increase the bitcoin protocol is known as a segregated witness, or SegWit. This term 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 from a block and join them within an extended block.