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In other words, it is a gamble. .
The reverse is also true. If computational power has been taken off of the network, the problem adjusts downward to earn mining easier. .
"Say I tell three friends I'm thinking of 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 specific number, they just have to be the very first person to figure any number that is less than or equal to this number I'm thinking of.
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"Let's 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 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 nearer to the goal answer of 19. .
"Now imagine that I present the'imagine what number I'm thinking of' question, but I'm not asking just 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 thinking about a 64-digit hexadecimal number. Now you see that it is going to be extremely difficult to guess the ideal answer." .
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If 1 in 7 trillion doesn't sound hard enough as is, here's the catch to the catch. Not only do bitcoin miners need to come up with the ideal hash, they also must be the first to do it.
Since 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 capable of 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 competitive that it can only be done profitably using all the most up-to-date ASICs. When using desktop computers, GPUs, helpful resources or older models of ASICs, the expense 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 that combine their computing power and split 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 informative post 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 verified 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, but 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 heart of the bitcoin protocol is known as scaling. While bitcoin miners generally agree that something must be done in order to deal with scaling, there is less consensus regarding how can it. At the time of writing, there are two major solutions to the scaling problem, either (1) to decrease the amount of information needed to verify each block or (2) to increase the number of transactions that each block can save.
Solution 2 will 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 the networks computing power voted to incorporate a program that would decrease the amount of information 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 separate, 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.