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In other words, it is a gamble. .
The reverse is also correct. If computational power is taken off of the network, the problem adjusts downward to make mining easier. .
"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 need to guess the exact number, they just must be the very first person to figure any number that's less than or equal to this number I'm thinking of.
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"Let us say I am thinking of the number 19. If Friend A guesses 21, they shed because 21>19. If Friend B supposes 16 and Friend C guesses 12, then they've both theoretically arrived 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 goal answer of 19. .
"Now imagine I pose the'guess what number I am thinking of' question, however I'm not asking only three friends, and I am not thinking of a number between 1 and 100. Instead, 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 difficult enough as is, here is the grab to the grab. Not only do bitcoin miners need to think of the ideal hash, but they also must be the very first to perform it.
Since 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 could be performed competitively on normal desktop computers. Over time, however, miners recognized that pictures cards commonly utilized 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 competitive that it can only be done profitably with the latest up-to-date ASICs. When using desktop computers, GPUs, or elderly versions of ASICs, the expense of energy consumption actually surpasses the revenue generated. Even with the newest unit at your disposal, one computer is seldom enough to compete with what what miners call"mining pools." .
An mining pool is a group of miners who combine their computing power and divide the mined bitcoin between participants. A disproportionately high number of cubes are mined by pools rather than by individual miners. In July 2017, mining pools and companies represented roughly 80% to 90% of bitcoin computing power. .
Between 1 in 7 trillion odds, scaling difficulty levels, and also 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 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 each 10 minutes. Since the network of bitcoin users 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.
This issue at the heart of the bitcoin protocol is known as scaling. Even though 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 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 every block can store.
Solution 2 will cope with scaling by allowing for more information to be processed every 10 minutes. .
In July 2017, bitcoin miners and mining companies representing roughly 80% to 90 percent of the networks computing power required to incorporate a program that will decrease the amount of information needed to confirm each block. In other words, they went with Solution 1.
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The program which miners voted to increase the bitcoin protocol is called a segregated witness, or SegWit. This term is an amalgamation of Segregated, meaning to different, and Witness, great site which describes signatures on a bitcoin transaction. Segregated Witness, then, means to separate transaction signatures from a block and join them as an extended block.