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In 2009, it was 50. In 2013, it was 25, at the time of writing it's 12.5, and sometime in the center of 2020 it will halve to 6.25. .

At this rate of halving, the total 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's the catch. In order for bitcoin miners to really earn bitcoin from verifying transactions, two things have to occur. To begin with, they must confirm 1 megabyte (MB) value of transactions, which can technically be as small as 1 transaction but are more often a few thousand, depending on how much information each transaction stores.

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Second, in order to put in a block of transactions to the blockchain, miners must solve a complex computational math problem, also called a"proof of work." What they're doing is trying to think of 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 gamble. .

The difficulty level of the most recent block at the time of writing is all about 7,184,404,942,701. That is, 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 level is corrected every 2016 blocks, or roughly every 2 weeks, with the goal of keeping rates of mining constant.

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The reverse is also correct. If computational power has been taken from this network, the problem adjusts downward to make mining simpler. .

"Say I tell three friends that 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 specific number, they simply must be the first person to guess any number that's less than or equal to the number I am thinking of.

"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 supposes 12, then they have both theoretically arrived at workable answers, because 16<19 and 12<19. There is no'extra credit' for Friend B, even web link though B's answer was closer to the goal answer of 19. .

"Now imagine that I pose 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. Rather, I am asking millions try these out of prospective miners and I am thinking of a 64-digit hexadecimal number. Now you see that it's going to be quite difficult to guess the right answer." Get More Info .

If 1 in seven 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 have to be the first to perform it.

Since 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 carried out competitively on normal desktops. Over time, however, miners recognized that graphics cards commonly utilized for video games tend to be more capable of mining than desktops and graphics processing units (GPU) came to dominate the match.

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These can run from $500 into the tens of thousands. .

Today, bitcoin mining is so aggressive 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 surpasses the revenue generated. Even with the newest unit available, one pc is seldom enough to compete with what 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. .

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Between 1 in 7 trillion chances, scaling difficulty levels, and also the huge network of consumers verifying transactions, one block of transactions is confirmed roughly every 10 minutes. But its important to keep in mind 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 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.