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In other words, it's a bet. .
The reverse is also true. 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 piece 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 guess any number that is less than or equal to this number I'm thinking of.
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"Let's say I'm thinking about 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 have both technically came at viable answers, because 16<19 and 12<19. There's no'extra credit' for Friend B, even though B's answer was closer to the target answer of 19. .
"Now imagine that I pose the'guess what number I'm thinking of' question, however I'm not asking only 3 friends, and I'm 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 hard to guess the ideal answer." .
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If 1 in 7 trillion doesn't sound difficult enough as is, here is the catch to the grab. Not only do bitcoin miners have to think of the ideal hash, they also must be the first to perform it.
Because 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. Just 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 to the tens of thousands. .
Today, bitcoin mining is so competitive that it can only be done profitably with all the most up-to-date ASICs. When using desktop computers, GPUs, or elderly versions of ASICs, the cost of energy consumption actually exceeds the revenue generated. Even with the newest unit at your disposal, one pc 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 large 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. .
Between 1 in 7 trillion odds, scaling difficulty levels, and also the huge 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 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 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 issue at the heart of the bitcoin protocol is known as scaling. Even though bitcoin miners generally agree that something has to be done in order to address scaling, there is less consensus about how do it. In 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 each block can store.
Solution 2 will deal with scaling by allowing for much more information to be processed every 10 minutes. .
In July 2017, bitcoin miners and mining companies representing approximately 80% to 90% of their networks computing electricity voted to incorporate a program that would decrease the amount of data needed to verify each this block. That is, they went with Solution 1.
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The app that 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, 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.