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In 2009, it was 50. In 2013, it was 25, at the time of writing it is 12.5, and sometime in the center of 2020 it will halve to 6.25. .
At this speed of halving, the total number of bitcoin in circulation will approach a limit of 21 million, making the currency more scarce and valuable over time but also more expensive for miners to produce.
Here's the catch. In order for bitcoin miners to really earn bitcoin from verifying transactions, two things have to happen. To begin with, they need to 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 information each transaction stores.
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Second, in order to put in a block of transactions to the blockchain, miners must solve a complex computational math problem, also referred to as 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's a bet. .
The difficulty level of the most recent block at the time of writing is all about 7,184,404,942,701. That is, the chance of a computer producing a hash below the target is 1 in 7,184,404,942,701 less than 1 in 7 trillion. That level is adjusted every 2016 blocks, or roughly every 2 weeks, with the goal of keeping rates of mining constant.
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The reverse is also true. If computational power has been taken from the network, the difficulty adjusts downward to earn mining easier. .
"Say I tell three friends that I'm thinking of a number between 1 and 100, and that 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 guess any number that is less than or equal to this number I am thinking of.
"Let us say I am thinking about the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B about his guesses 16 and Friend C guesses 12, then they've both theoretically arrived at workable 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 pose the'guess what number I'm thinking of' question, however I'm not asking only 3 friends, and I'm not thinking of a number between 1 and 100. Instead, I am asking millions of would-be miners and I am thinking of a 64-digit hexadecimal number. Now you see that it is going to be extremely hard to guess the ideal answer." .
If 1 in seven trillion doesn't sound hard enough as is, here is the grab to the catch. Not only do bitcoin miners need to think of the right hash, they also must be the very first to perform it.
Since bitcoin mining is essentially guesswork, arriving at the ideal answer before another miner has almost everything to do with how right here fast your computer can produce hashes. Only a decade ago, bitcoin miners could be performed competitively on normal desktop computers. Over time, however, miners recognized that pictures cards commonly used for video games were more effective at mining than desktops and graphics processing units (GPU) came to dominate the match.
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These can run from $500 into the tens of thousands. .
Today, bitcoin mining is so aggressive that it can only be done profitably with all the latest up-to-date ASICs. When using desktop computers, GPUs, or elderly versions of ASICs, the cost of energy consumption actually surpasses the revenue generated. Even with the newest unit at your disposal, one computer is seldom enough to compete with what what miners call"mining pools" .
A mining pool is a group their website of miners that combine their computing power and split the mined bitcoin between participants. A disproportionately large 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. .
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Between 1 in 7 trillion chances, scaling difficulty levels, and the massive 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 target, 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. 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 which can be processed in 10 minutes.