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In other words, it is a gamble. .
The opposite is also true. If computational power is taken from the network, the difficulty adjusts downward to make mining simpler. .
"Say I tell three friends 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 have to be the very first person to figure any number that is less than or equal to the number I am thinking of.
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"Let us say I am thinking about the number 19. If Friend A guesses 21they lose because 21>19. If Friend B supposes 16 and Friend C guesses 12, then they've both technically came at viable answers, since 16<19 and 12<19. There's no'extra credit' for Friend B, even though B's answer was closer to the target answer of 19. .
"Now imagine I present the'guess what number I am thinking of' question, however I am not asking just 3 friends, and I'm 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's going to be quite 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 catch to the catch. Not only do bitcoin miners have to come up with the ideal hash, but 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 almost everything to do with how fast your computer can produce hashes. Only a decade ago, bitcoin miners can be performed competitively on normal desktops. 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.
These can run from $500 to the tens of thousands. .
Today, bitcoin mining is so competitive that 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 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." .
An mining pool is a group of miners that combine their computing power 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 roughly 80% to 90 percent of bitcoin computing power. .
Between 1 in 7 trillion chances, scaling difficulty levels, and the massive 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 target, not a rule.
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The bitcoin network can process about seven transactions per second, with transactions being logged in the blockchain every 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.
This issue at the center of my company the bitcoin protocol is known as scaling. Even though bitcoin miners generally agree that something has to be done to deal with scaling, there is less consensus regarding how do it. At the time of writing, there are two big solutions to this scaling problem, either (1) to lower the amount of data needed to confirm each block or (2) to increase the number of transactions that every block can store.
Solution 2 would cope with scaling by allowing for much more information to be processed each 10 minutes. .
In July 2017, bitcoin miners and mining companies representing roughly 80% to 90% of their networks computing power voted to incorporate a program that will decrease the amount of information needed to confirm each block. That is, they went with Solution 1.
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The app that miners voted to increase the bitcoin protocol is called a segregated witness, or SegWit. This expression is an amalgamation of Segregated, meaning to different, and see it here Witness, which describes signatures on a bitcoin transaction. Segregated Witness, then, means to separate transaction signatures from a block and join them within an extended block.