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In 2009, it had been 50. In 2013, it was 25, at the time of writing it is 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 valuable over time but also more expensive for miners to produce.
Here is the catch. In order for bitcoin miners to really earn bitcoin from verifying transactions, two things must happen. First, they need to confirm 1 megabyte (MB) value of transactions, which can technically be as little as 1 transaction but are far more often a few 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 solve a intricate 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 is less than or equal 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 just 1 in 7,184,404,942,701 less than 1 in seven trillion. That level is corrected every 2016 blocks, or about every two weeks, with the aim of keeping rates of mining constant.
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The opposite is also true. If computational power is taken from the network, the difficulty adjusts downward to make mining easier. .
"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 exact number, they just have to be the first person to figure any number that's less than or equal to this number I'm thinking of.
"Let us say I am 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've both theoretically arrived at workable answers, since 16<19 and 12<19. There's no'extra credit' for Friend B, even though B's answer was closer to the goal answer of 19. .
"Now imagine I pose the'guess what number I'm thinking of' question, but I'm not asking only 3 friends, and I am not thinking of a number between 1 and 100. Rather, I am asking millions of prospective miners and I'm over at this website thinking of a 64-digit hexadecimal number. Now you see that it is going to be extremely difficult to guess the ideal answer." .
If 1 in seven trillion doesn't sound difficult enough as is, here is the catch to the catch. Not only do bitcoin miners need to think of the ideal hash, they also have to be the first to do it.
Because bitcoin mining is essentially guesswork, arriving at the ideal answer before another miner has everything to do with how fast your computer can produce hashes. Only a decade ago, bitcoin miners can be performed competitively on normal desktops. Over time, however, miners realized that graphics cards commonly utilized for video games were 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 to the tens of thousands. .
Nowadays, bitcoin mining is so competitive that it can only be done profitably using all the most up-to-date ASICs. When using desktop computers, GPUs, or elderly versions this of ASICs, the expense of energy consumption actually exceeds the revenue generated. Even with the newest unit at your disposal, one computer is seldom enough to compete with exactly what miners call"mining pools." .
A mining pool is a group of miners who combine their computing ability and divide 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. .
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Between 1 additional hints in 7 trillion chances, scaling difficulty levels, and the huge network of consumers verifying transactions, one block of transactions is confirmed roughly every 10 minutes. But its important to keep in mind 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 each 10 minutes. As the network of bitcoin consumers 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.