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In 2009it was 50. In 2013, it had been 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 valuable over time but also more costly for miners to produce.
Here's the catch. In order for bitcoin miners to really earn bitcoin from verifying transactions, two things must happen. First, they must confirm 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 information each transaction shops.
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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're actually doing is trying to think of a 64-digit hexadecimal number, called a"hash," that's less than or equivalent to the hash.
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In other words, it's a gamble. .
The difficulty level of the most recent block at the time of writing is about 7,184,404,942,701. That is, the chance of a computer producing a hash beneath the goal is 1 in 7,184,404,942,701 less than 1 in 7 trillion. That level is adjusted every 2016 blocks, or roughly every two weeks, with the aim of keeping rates of mining constant.
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The reverse is also true. If computational power is taken from this network, the difficulty adjusts downward to make mining simpler. .
"Say I tell three friends that I'm thinking about 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 simply must be the very first person to anchor guess any number that is less than or equal to this number I'm thinking of.
"Let's say I am thinking about the number 19. If Friend A guesses 21they lose because 21>19. If Friend B guesses 16 and Friend C guesses 12, then they've both theoretically arrived at workable answers, because 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 that I pose the'guess what number I'm thinking of' question, however I'm not asking only three friends, and I am not thinking of a number between 1 and 100. Instead, I'm asking millions of prospective miners and I am 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 7 trillion doesn't sound hard enough as is, here is the catch to the grab. Not only do bitcoin miners have to come up with the right hash, they also must 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 desktops. Over time, however, miners recognized that graphics cards commonly utilized 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. .
Nowadays, bitcoin mining is so competitive that it can only be done profitably with the most up-to-date ASICs. When using desktop computers, GPUs, or elderly versions of ASICs, the expense official source 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" .
An mining pool is a group of miners who combine their computing power and divide 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 approximately 80% to 90 percent of bitcoin computing power. .
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Between 1 in 7 trillion odds, scaling difficulty levels, and the huge network of consumers verifying transactions, one block of transactions is verified roughly every 10 minutes. But its important to remember 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 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.