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In 2009, it had been 50. In 2013, it had been 25, in 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 make.
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) worth of transactions, which can technically be as small as 1 transaction but are far more often a few thousand, depending on how much information each transaction shops.
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Second, in order to add a block of transactions to the blockchain, miners should fix a complex computational math problem, also referred to as a"proof of labour ." What they are doing is trying to think of a 64-digit hexadecimal number, known as a"hash," that's less than or equal 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 about 7,184,404,942,701. That is, the chance of a computer producing a hash below the target is just 1 in 7,184,404,942,701 less than 1 in 7 trillion. That amount is corrected every 2016 cubes, or roughly every 2 weeks, with the goal of keeping rates of mining constant.
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The opposite is also true. If computational power has been taken off of this network, the difficulty adjusts downward to earn mining easier. .
"Let us say I'm thinking of the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B supposes 16 and Friend C guesses 12, then they've both technically came at workable answers, because 16<19 and 12<19. There is no'extra credit' for Friend B, even though B's answer was nearer to the goal answer of 19. .
"Now imagine that I present the'imagine what number I am thinking of' question, however I'm not asking just three friends, and I'm not thinking of a number between 1 and 100. Instead, I am asking millions of prospective miners and I am thinking about a 64-digit hexadecimal number. Now you see that it is going to be quite difficult to guess the right answer." .
If 1 in 7 trillion doesn't sound difficult enough as is, here's the catch to the grab. Not only do bitcoin miners need to come up with the ideal hash, but they also must be the very first to perform it.
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These can run from $500 into the tens of thousands. .
Today, bitcoin mining is so competitive it can only be done profitably with 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 power and divide the mined bitcoin between participants. A disproportionately large number of cubes 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 chances, scaling difficulty levels, and the huge network of consumers verifying transactions, one block of transactions is confirmed 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. 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.