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In other words, it's a gamble. .
The reverse is also true. If computational power is taken off of the network, the difficulty adjusts downward to make mining simpler. .
"Say I tell three friends that 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 specific number, they simply must be the very first person to figure any number that's less than or equal to the number I am thinking of.
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"Let us say I am thinking of 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 technically came at viable answers, since 16<19 and 12<19. There is no'extra credit' for Friend B, even though B's answer was closer to the goal answer of 19. .
"Now imagine that I present the'guess what number I am thinking of' question, but I'm not asking just three friends, and I am not thinking of a number between 1 and 100. Rather, I am asking millions of would-be miners and I'm thinking of a 64-digit hexadecimal number. Now you see that it is going to be extremely hard to guess the right answer." .
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If 1 in seven trillion doesn't sound hard enough as is, here is the grab to the grab. Not only do bitcoin miners have to come up with the right hash, but they also must be the very first to perform it.
Because bitcoin mining is essentially guesswork, arriving at the ideal answer before another miner has everything to do with how fast your computer can create hashes. Only a decade ago, bitcoin miners could be performed competitively on normal desktops. Over time, however, miners recognized that graphics cards commonly used for video games were 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 read mining is so competitive it can only be done profitably using all the most up-to-date ASICs. When using desktop computers, GPUs, or older models of ASICs, the cost of energy consumption actually surpasses the revenue generated. Even with the newest unit at your disposal, one computer is rarely enough to compete with exactly what miners call"mining pools" .
A 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 approximately 80% to 90% of bitcoin computing power. .
Between 1 in 7 trillion odds, scaling difficulty levels, and also the massive network of consumers verifying transactions, one block of transactions is verified roughly top article 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 each 10 minutes. As the network of bitcoin users 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.
This dilemma at the heart of the bitcoin protocol is known as scaling. Even though bitcoin miners generally agree that something has to be done to deal with scaling, there is less consensus regarding how do it. In the time of writing, there are two big solutions to the scaling problem, either (1) to lower the amount of information needed to verify 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 each 10 minutes. .
In July 2017, bitcoin miners and mining companies representing roughly 80% to 90% of their networks computing electricity voted to incorporate a program that would reduce the amount of information needed to verify each block. In other words, 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 expression 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 within an extended block.