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In other words, it's a bet. .
The opposite is also true. If computational power has been taken off of the network, the problem adjusts downward to make mining easier. .
"Say I tell three friends I'm thinking of 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 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 the number I am thinking of.
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"Let's 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 guesses 12, then they've both theoretically arrived at viable answers, because 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 that I present the'guess what number I'm thinking of' question, but I am not asking only three friends, and I am not thinking of a number between 1 and 100. Instead, I am asking millions of would-be miners and I'm thinking about a 64-digit hexadecimal number. Now you see that it's going to be quite hard to guess the right answer." .
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If 1 in 7 trillion doesn't sound difficult enough as is, here is the catch to the catch. Not only do bitcoin miners need to come up with the right hash, but they also have to be the very 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 create hashes. Just a decade ago, bitcoin miners could be carried out competitively on normal desktop computers. As time passes, however, miners recognized that pictures cards commonly utilized for video games were more effective at mining than desktops and graphics processing units (GPU) came to dominate the match.
These can run from $500 into 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, or elderly versions of ASICs, the cost of energy consumption actually exceeds the revenue generated. Even with the news newest unit available, one pc is rarely enough to compete with what 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 roughly 80% to 90% of bitcoin computing power. .
Between 1 in 7 trillion odds, scaling difficulty levels, and 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 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. As the network of bitcoin consumers continues to grow, however, 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 center of the bitcoin protocol is known as scaling. Even though bitcoin miners generally agree that something must be done in order to address scaling, there is less consensus regarding how do it. In the time of writing, there are two major solutions to this scaling problem, either (1) to decrease the amount of data needed to verify each block or (2) to increase the number of transactions that every block can store.
Solution 2 would deal 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 percent of their networks computing electricity voted to incorporate a program that will decrease the amount of data needed to confirm each block. That is, they went with Solution 1.
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The program 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 as an extended block.