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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 middle 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 precious over time but also more costly for miners to make.

Here's the catch. In order to get bitcoin miners to actually earn bitcoin from verifying transactions, two things must happen. To begin with, they must verify 1 megabyte (MB) worth of transactions, which can theoretically be as small as 1 transaction but are far 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 should fix a complex computational math problem, also called a"proof of labour " What they are doing is trying to come up with a 64-digit hexadecimal number, known as a"hash," that's less than or equal 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 all about 7,184,404,942,701. That is, the chance of a pc producing a hash beneath the goal is 1 in 7,184,404,942,701 less than 1 in 7 trillion. That amount is corrected every 2016 cubes, or roughly every two weeks, with the goal 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 problem adjusts downward to make mining easier. .

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"Say I tell three friends that I'm thinking about a number between 1 and 100, and that 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 must be the very first person to guess any number that is less than or equal to the number I am thinking of.

"Let's say I'm thinking of the number 19. If Friend A guesses 21, they shed because 21>19. If Friend B supposes 16 and Friend C supposes 12, then they have both theoretically arrived at workable answers, because 16<19 and 12<19. There is no'extra credit' for Friend B, even though B's answer was nearer to check it out the target answer of 19. .

"Now imagine I present the'imagine what number I'm thinking of' question, but I'm not asking just 3 friends, and I'm not thinking of a number between 1 and 100. Instead, I'm asking millions of would-be miners and I'm thinking about a 64-digit hexadecimal number. Now you see that it's going to be quite hard to guess the right answer." .

If 1 in seven trillion doesn't sound hard enough as is, here's the catch to the grab. Not only do bitcoin miners need to come up with the right hash, they also must be the first to perform it.

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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 could be carried out competitively on normal desktop computers. As time passes, however, miners recognized that pictures cards commonly used for video games tend to be 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. .

Nowadays, bitcoin mining is so aggressive 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 expense of energy consumption actually exceeds the revenue generated. Even with the newest unit at your disposal, one pc is seldom enough to compete with what what miners call"mining pools." .

A mining pool is a group of miners who combine their computing power 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 recommended you read companies represented roughly 80% to 90% of bitcoin computing power. .

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Between 1 in 7 trillion chances, scaling difficulty levels, and the massive network of users verifying transactions, one block of transactions is confirmed roughly every 10 minutes. However, its important to keep in mind that 10 minutes is a goal, 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 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.

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