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In other words, it's a gamble. .
The opposite is also true. If computational power is taken from this network, the difficulty adjusts downward to earn 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 have to guess the exact number, they just must be the very first person to guess any number that is less than or equal to this number I'm 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 supposes 12, then they have 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 nearer to the target answer of 19. .
"Now imagine I pose the'imagine what number I am thinking of' question, but I am not asking just 3 friends, and I'm not thinking of a number between 1 and 100. Rather, 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 difficult to guess the right answer." .
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If 1 in 7 trillion doesn't sound difficult enough as is, here's the grab to the grab. Not only do bitcoin miners have to come up with the ideal hash, they also have to be the very first to perform 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. Just a decade ago, bitcoin miners can be performed competitively on normal desktop computers. As time passes, however, miners realized that graphics cards commonly used for video games were more capable of view mining than desktops and graphics processing units (GPU) came to dominate the match.
These can run from $500 to the tens of thousands. .
Nowadays, bitcoin mining is so aggressive it can only be done profitably using the most up-to-date ASICs. When using desktop computers, GPUs, or older versions of ASICs, the cost of energy consumption actually exceeds the revenue generated. Even with the newest unit available, one computer is rarely enough to compete with exactly what 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 roughly 80% to 90 percent of bitcoin computing power. .
Between 1 in 7 trillion odds, scaling difficulty levels, and also the massive network of consumers 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, but the number of transactions made in 10 minutes will eventually exceed the number of transactions that can be processed in 10 minutes.
This dilemma at the center of the bitcoin protocol is known as scaling. While bitcoin miners generally agree that something has to be done to address scaling, there is less consensus regarding how can it. At the time of writing, there are two big solutions to the 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 save.
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 roughly 80% to 90 percent of the networks computing electricity 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 which miners voted to increase the bitcoin protocol is known as a segregated witness, or SegWit. This expression 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 as an extended block.