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In other words, it's a gamble. .
The reverse is also correct. If computational power is taken from 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 that 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 must be the very first person to guess any number that is less than or equal to the number I'm thinking of.
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"Let us say I'm thinking about the number 19. If Friend A guesses 21, they shed because 21>19. If Friend B guesses 16 and Friend C supposes 12, then they have both theoretically arrived at workable 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 present the'guess what number I'm thinking of' question, but I am not asking only 3 friends, and I'm not thinking of a number between 1 and 100. Rather, I'm 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 extremely 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 must be the very first to perform it.
Since bitcoin mining is essentially guesswork, arriving at the ideal answer before another miner has almost everything to do with how fast your computer can produce hashes. Just a decade ago, bitcoin miners could be carried out competitively on normal desktop computers. Over time, 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.
These can run from $500 into the tens of thousands. .
Nowadays, bitcoin mining is so aggressive that it can only be done profitably using all the latest up-to-date ASICs. When using desktop computers, GPUs, or elderly versions 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 what what miners call"mining pools." .
A mining pool is a group of miners that combine their computing ability 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 massive network of users verifying transactions, one block of transactions is verified roughly every 10 minutes. But its important to remember that 10 minutes is a goal, not a guideline.
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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, but the number of transactions made in 10 next minutes will eventually exceed the number of transactions that can be processed in 10 minutes.
This dilemma at the center 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 every block can save.
Solution 2 will deal with scaling by allowing for more information to be processed each 10 minutes. .
In July 2017, bitcoin miners and mining companies representing approximately 80% to 90% of the networks computing power voted to incorporate a program that Top Bitcoin Mining Hardware would decrease the amount of information needed to verify each block. In other words, they went with Solution 1.
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The program which miners voted to add to the bitcoin protocol is known as a segregated witness, or SegWit. This expression is an amalgamation of Segregated, meaning to separate, 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.