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In other words, it's a bet. .
The opposite is also correct. If computational power is taken off of the network, the difficulty adjusts downward to make mining simpler. .
"Say I tell three friends that 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 exact number, they just must be the first person to guess any number that's less than or equal to the number I'm thinking of.
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"Let us say I am thinking of the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B guesses 16 and Friend C supposes 12, then they have both theoretically arrived at viable 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 I present the'imagine what number I'm thinking of' question, however I'm not asking only 3 friends, and I am not thinking of a number between 1 and 100. Rather, I'm asking millions of prospective miners and I am thinking of a 64-digit hexadecimal number. Now you see that it's going to be extremely hard to guess the ideal answer." .
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If 1 in seven trillion doesn't sound hard enough as is, here is the grab to the catch. Not only do bitcoin miners have to come up with the right hash, they also have to be the first to perform it.
Because bitcoin mining is essentially guesswork, arriving at the right answer before another miner has almost everything to do with how fast your computer can create hashes. Just a decade ago, bitcoin miners can be performed competitively on normal desktop computers. Over time, however, miners recognized that pictures 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 into the tens of thousands. .
Nowadays, 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 models of ASICs, the cost of energy consumption actually exceeds the revenue generated. Even with the newest unit available, one computer is seldom enough to compete with what what miners call"mining pools" .
A mining pool is a group of miners that combine their computing power 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 approximately 80% to 90% of bitcoin computing power. .
Between 1 in 7 trillion chances, scaling difficulty levels, and the my latest blog post 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 see page each 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.
This dilemma at the heart of the bitcoin protocol is known as scaling. While bitcoin miners generally agree that something must be done to deal with scaling, there is less consensus regarding how can it. At the time of writing, there are two major solutions to the scaling problem, either (1) to decrease the amount of information needed to confirm each block or (2) to increase the number of transactions that each block can store.
Solution 2 would deal with scaling by allowing for much more information to be processed every 10 minutes. .
In July 2017, bitcoin miners and mining companies representing approximately 80% to 90% of the networks computing electricity required to incorporate a program that will decrease the amount of information needed to confirm each block. In other words, they went with Solution 1.
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The app which miners voted to increase the bitcoin protocol is called a segregated witness, or SegWit. This expression is an amalgamation of Segregated, meaning to separate, and Witness, which refers to signatures on a bitcoin transaction. Segregated Witness, then, means to separate transaction signatures from a block and attach them as an extended block.