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In 2009, it had been 50. In 2013, it was 25, in the time of writing it's 12.5, and sometime in the center 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 valuable over time but also more costly for miners to produce.
Here is the catch. In order for bitcoin miners to actually earn bitcoin from verifying transactions, two things have to happen. To begin with, they need to confirm 1 megabyte (MB) value of transactions, which can theoretically be as little as 1 transaction but are far more often several thousand, depending on how much information each transaction shops.
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Second, in order to add a block of transactions to the blockchain, miners should fix a complex computational math problem, also called a"proof of work." What they are doing is trying to come up with a 64-digit hexadecimal number, known as a"hash," that's less than or equivalent to the hash.
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In other words, it is 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 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 blocks, or roughly every 2 weeks, with the aim of keeping rates of mining constant.
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The reverse is also true. If computational power is 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 have to guess the specific number, they just have to be the very first person to figure any number that is less than or equal to the number I am thinking of.
"Let us 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 guesses 12, then they have both technically came 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 target answer of 19. .
"Now imagine that I present the'imagine what number I'm thinking of' question, Get More Info however I'm not asking only three friends, and I'm not thinking of a number between 1 and 100. Rather, I'm 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 hard to guess the ideal answer." .
If 1 in 7 trillion doesn't sound difficult enough as is, here's the grab to the grab. Not only do bitcoin miners have to think of the ideal hash, but they also must be the first to perform it.
Because bitcoin mining is essentially guesswork, arriving at the right answer before another miner has everything to do with how fast your computer can produce hashes. Just a decade ago, bitcoin miners could be performed competitively on normal desktops. As time passes, however, miners recognized that pictures cards commonly utilized 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. .
Today, bitcoin mining is so competitive it can only be done profitably using 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 that combine their computing ability and divide the mined bitcoin between participants. A disproportionately large 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 users verifying transactions, one block of transactions is confirmed 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 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.