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In 2009, it had been 50. In 2013, it had been 25, at the time of writing it's 12.5, and sometime in the middle of 2020 it will halve to 6.25. .

At this rate of halving, the entire number of bitcoin in circulation will approach a limit of 21 million, making the currency more scarce and precious over time but also more costly for miners to make.

Here is the catch. In order to get bitcoin miners to actually earn bitcoin from verifying transactions, two things have to occur. To begin with, they must confirm 1 megabyte (MB) worth of transactions, which can technically be as little as 1 transaction but are more often a few thousand, depending on how much information each transaction stores.

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Second, in order to put in a block of transactions to the blockchain, miners must solve a complex computational science difficulty, also called a"proof of work" What they are doing is trying to come up with a 64-digit hexadecimal number, called a"hash," that's less than or equivalent to the target hash.

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In other words, it's a bet. .

The difficulty level of the most recent block at the time of writing is all about 7,184,404,942,701. In other words, the chance of a pc producing a hash beneath the target is 1 in 7,184,404,942,701 less than 1 in 7 trillion. That amount is corrected every 2016 cubes, or about every 2 weeks, with the goal of keeping rates of mining constant.

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The reverse is also correct. If computational power is taken off of the network, the problem adjusts downward to make mining simpler. .

"Say I tell three friends 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 have to guess the exact number, they simply have to be the very first person to figure any number that is less than or equal to this number I am thinking of.

"Let us say I'm thinking about the number 19. If Friend A guesses 21they shed because 21>19. If Friend B guesses 16 and Friend C supposes 12, then they've both theoretically arrived at workable answers, since 16<19 and 12<19. There is no'extra credit' for Friend B, even though B's answer was nearer to the target answer of 19. .

"Now imagine I pose the'guess what number I'm thinking of' question, but I am not asking just three friends, and I'm not thinking of a number between 1 and 100. Instead, I'm asking millions of would-be miners and I'm thinking about a 64-digit hexadecimal number. Now you see that it is going to be extremely hard to guess the ideal answer." .

If over here 1 in seven trillion doesn't sound hard enough as is, here's the catch to the grab. Not only do bitcoin miners have to think of the right hash, they also have to be the very first to do it.

Since bitcoin mining is essentially guesswork, arriving at the right answer before another miner has everything to do with how fast your computer can produce hashes. Only a decade ago, bitcoin miners can be performed competitively on normal desktop computers. As time passes, check my blog however, miners realized that pictures cards commonly utilized for video games tend to be more effective at mining than desktops and graphics processing units (GPU) came to dominate the game.

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These can run click to read from $500 into the tens of thousands. .

Today, bitcoin mining is so competitive it can only be done profitably using all the latest up-to-date ASICs. When using desktop computers, GPUs, or elderly models of ASICs, the expense of energy consumption actually surpasses the revenue generated. Even with the newest unit available, one pc is rarely enough to compete with exactly what miners call"mining pools" .

An mining pool is a group of miners who combine their computing power 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 percent of bitcoin computing power. .

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Between 1 in 7 trillion chances, scaling difficulty levels, and the huge network of users verifying transactions, one block of transactions is verified roughly every 10 minutes. But its important to keep in mind that 10 minutes is a goal, not a rule.

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The bitcoin network can process about seven transactions per second, with transactions being logged in the blockchain each 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 that can be processed in 10 minutes.