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In 2009, it was 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 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's the catch. In order for bitcoin miners to actually earn bitcoin from verifying transactions, two things have to occur. 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 a few thousand, depending on how much data each transaction stores.
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Second, in order to add a block of transactions to the blockchain, miners must fix a complex computational math problem, also called a"proof of work." What they are doing is trying to think of a 64-digit hexadecimal number, known as a"hash," that's less than or equivalent to the target 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. In other words, the chance of a pc producing a hash below the target is 1 in 7,184,404,942,701 less than 1 in seven trillion. That level is adjusted every 2016 blocks, or about every 2 weeks, with the aim 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 simpler. .
"Say I tell three friends 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 have to guess the exact number, they simply must be the very first person to guess any number that is less than or equal to this number I'm thinking of.
"Let us say I am thinking of 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 this link technically came at viable answers, since 16<19 and 12<19. There's no'extra credit' for Friend B, even link though B's answer was nearer to the goal answer of 19. .
"Now imagine I pose the'guess what number I am thinking of' question, but I'm not asking just three friends, and I'm not thinking of a number between 1 and 100. Instead, I am 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 difficult to guess the right answer." .
If 1 in 7 trillion doesn't sound hard enough as is, here's the catch to the catch. Not only do bitcoin miners need to think of the right hash, they also have to be the very first to perform it.
Since 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. Only a decade ago, bitcoin miners could be carried out competitively on normal desktop computers. As time passes, however, miners realized that graphics 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 to the tens of thousands. .
Today, bitcoin mining is so aggressive it can only be done profitably using all the most up-to-date ASICs. When using desktop computers, GPUs, or older versions of ASICs, the expense 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." .
A 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 approximately 80% to 90 percent of bitcoin computing power. .
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Between 1 in 7 trillion chances, 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 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 every 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 that can be processed in 10 minutes.