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In other words, it's a bet. .
The reverse is also true. If computational power is taken from this 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 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 have to be the very first person to guess any number that's less than or equal to this number I am thinking of.
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"Let's say I'm thinking of the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B supposes 16 and Friend C supposes 12, then they have both technically came at workable answers, because 16<19 and 12<19. There is no'extra credit' for Friend B, even though B's answer was closer to the target answer of 19. .
"Now imagine I present the'imagine what number I am thinking of' question, however I am not asking only 3 friends, and I am not thinking of a number between 1 and 100. Rather, I'm asking millions of would-be miners and I'm thinking of a 64-digit hexadecimal number. Now you see that it is going to be quite difficult to guess the right answer." .
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If 1 in 7 trillion doesn't sound hard enough as is, here is the catch to the catch. Not only do bitcoin miners need to come up with the ideal hash, they also must be the very 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 could be performed competitively on normal desktops. Over time, however, miners realized 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. .
Today, bitcoin mining is so aggressive that it can only be done profitably using the most up-to-date ASICs. When using desktop computers, GPUs, or older models of ASICs, the expense of energy consumption actually exceeds the revenue generated. Even with the newest unit available, one computer is seldom enough to compete with what what home miners call"mining pools" .
An mining pool is a group of miners who combine their computing ability 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 also the massive network of users verifying transactions, one block of transactions is verified roughly every 10 minutes. However, its important to remember 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. Since 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 dilemma at the heart of the bitcoin protocol is known as scaling. Even though bitcoin miners generally agree that something must 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 decrease 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 more information to be processed each 10 minutes. .
In July 2017, bitcoin miners and mining companies representing approximately 80% to 90% of the networks computing power required to incorporate a program that will reduce the amount of data needed to verify each block. That is, they went with Solution 1.
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The app that miners voted to add to the bitcoin protocol is called a segregated witness, or SegWit. This term is an amalgamation of Segregated, meaning to different, and Witness, which refers to signatures on a bitcoin transaction. Segregated Witness, then, means to separate transaction signatures from a block and join them within an extended block.