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In 2009, it had been 50. In 2013, it had been 25, in the time of writing it is 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 valuable over time but also more costly for miners to produce.

Here is the catch. In order for bitcoin miners to actually earn bitcoin from verifying transactions, two things have to occur. First, they need to confirm 1 megabyte (MB) value of transactions, which can theoretically be as small as 1 transaction but are far more often a few thousand, depending on how much data each transaction stores.

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Second, in order to add a block of transactions to the blockchain, miners should solve a intricate computational math problem, also called a"proof of work" What they're actually doing is trying to come up with a 64-digit hexadecimal number, known as a"hash," that is less than or equivalent to the target hash.

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In other words, it is 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 below the goal is just 1 in 7,184,404,942,701 less than 1 in 7 trillion. That amount is adjusted every 2016 blocks, or about every 2 weeks, with the aim of keeping rates of mining constant.

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The opposite is also correct. If computational power is taken from the network, the problem adjusts downward to make mining easier. .

"Say I tell three friends that 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 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 the number I'm thinking of.

"Let's 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 guesses 12, then they have both theoretically arrived at workable answers, since 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 pose the'imagine what number I am thinking of' question, however I am not asking useful link 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 of a 64-digit hexadecimal number. Now you see that it is going to be quite difficult to guess the ideal answer." .

If 1 in 7 trillion doesn't sound hard enough as is, here's the grab to the catch. Not only do bitcoin miners have to come up with the right hash, they also must be the very first to perform it.

Since bitcoin mining is essentially guesswork, arriving at the right 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 desktops. As time passes, however, miners recognized 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 from $500 into the tens of thousands. .

Nowadays, bitcoin mining is so aggressive it can only be done profitably using the most up-to-date ASICs. When using desktop computers, GPUs, or older versions of ASICs, the cost of energy consumption actually surpasses the revenue generated. Even with the newest unit available, 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 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 percent of bitcoin computing power. .

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Between 1 in 7 trillion odds, scaling difficulty levels, and the huge network of consumers verifying transactions, one block of transactions is confirmed roughly every 10 minutes. However, 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. As the network of bitcoin consumers continues to grow, but the number of transactions made in 10 minutes will eventually exceed the number of transactions which can be processed in 10 minutes.