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The 21 companies that control bitcoin
Bitcoin mining is a transaction record process with bitcoins to blockchain – the public database of all the operations with Bitcoin, which is responsible for the transaction confirmation. Network nodes use blockchain to differ the real transactions from the attempt to spend the same facilities twice. The main mining objective is reaching a consensus between network nodes on which transactions consider legitimate.
Category: Mining
What is Bitcoin mining[edit]
Bitcoin mining is the process of issuing bitcoin, built on the calculation of mathematical problems, is the only way to create a cryptocurrency.
The essence of mining is that in different parts of the Earth, there are computers that solve mathematical tasks, the result of which is the creation of bitcoin. The release (production) process is distributed to all participants in the system, which ensures security and is not controlled by a single issuing center.
All Bitcoin What is bitcoin mining eli5 wikipedia are recorded in the public transaction log, they are transmitted to the miners in a chain. The job of which is to pick up one single hash from a million combinations, which would be suitable for all new transactions and a secret key, which is a guarantee of receiving a reward of 25 Bitcoins. At the same time, many “getters” are competing for the award, who are the first to try to figure out the hash. When it is guessed, the block and all transactions are closed and the miners start generating the next block.
An example hash with the same phrases but with different additional parameters (in the example, the last line has the lowest hash value):
The target level of difficulty in the Bitcoin system is recalculated every 2016 blocks (approximately 2 times a week). It can increase or decrease, it all depends on the time of creation of new batches of the block and how much it differs from 2016 minutes (20160 * 10). Regardless of the total power of all miners, 1 block is generated on average within 10 minutes.
The miner's probability of receiving a reward during these 10 minutes is equal to the ratio of his computing power to the computing power of the entire network. And if this ratio is small, then the probability of receiving an award, even over a long period of time, will be low.
Transaction record process[edit]
Besides this, mining is the only way of bitcoins emission that are allocated as a miner reward for the mathematical task solution with the help of computer equipment. The process is advisedly done resource-intensive and difficult to leave permanent the number of blocks found by miners.
Every block should contain the confirmation that the mathematical task has been solved and each of the network nods can easily check, if the block has been really closed by the rules. Emission is decentralized as a reward that means a control absence over the output by a single center. During this process miners confirm accomplishing transactions in the network. In order to protect the network from overruns, mining is possible in strictly defined capacities.
Bitcoins, issued with the help of mining are the best way to hold the transaction anonymity during the work with cryptocurrency. Nevertheless, they can be used only after getting 100 network confirmations.
How Bitcoin Mining Works[edit]
All the transfers in the Bitcoin system are public. Miners’ work consists in choosing the right hash, which will be convenient to all the network transactions and will provide getting of the private key. There are millions of possible combinations and that's why the process usually takes time and What is bitcoin mining eli5 wikipedia powerful equipment.
Unknown hash is the quantity that consists of the previous block hash, a random What is bitcoin mining eli5 wikipedia and transactions check value sum, made during 10 minutes. System conditions can satisfy the only one quantity, which isn't permanent and changes after each block is closed.
As soon as the right hash is defined the transaction block closes and the miner obtains reward in the amount of 12.5 bitcoins. This process can be compared with lottery, because a What is bitcoin mining eli5 wikipedia of participants are simultaneously searching the hash. The system works pursuant to the strict rules and according to them changing of closed block is practically impossible.
Difficulty[edit]
Mining difficulty is a dynamic indicator that is periodically recalculated. With an increase in the processing power What is bitcoin mining eli5 wikipedia mining equipment, complexity grows. It is best to look for up-to-date information on the state of difficulty in mining cryptocurrency on official currency sites. However, this is difficult. Links to mining statistics, even on official websites, are sometimes difficult to find. To simplify the process, aggregator sites of statistical information about all cryptocurrencies have been created. They collect, process and publish relevant data not only about the complexity of mining, but also several dozen indicators: price, capitalization, hashrate, profitability, transaction amount, and so on.
Mining in pools[edit]
Main page: Pooled mining
Bitcoin mining is a very difficult process and it's necessary to have essential capacities for processing. It has become practically impossible to What is bitcoin mining eli5 wikipedia mining alone, because of permanent increasing difficulty of the process and crypto-currency market development. As a result, the concept “pool mining” has appeared, which means the computational capacities banding of several What is bitcoin mining eli5 wikipedia in a group for the new block generation. The pool obtained reward for the closed block is shared between its participants.
Equipment[edit]
For the long time mining has been available for home computers users, but in 2013 competition between miners for finding the right hash has increased, therefore personal mining has lost it's economic justifiability. During the development and modernization process the next computer equipment types have been used for mining:
- CPU is a one of the oldest versions working with the help of the computer processor. This option can be found in the main bitcoin client, but it's off-stream now because of the extra low effectiveness; GPU lies in using graphic card. This type of mining has changed the processors. It's hallmark is the increasing of system power;FPGA is an upgrade variant of GPU, which differs by lower energy consumption;ASIC is a mining with a special equipment created specially for work with crypto-currency. Its effectiveness far exceeds the attributes of usual graphic cards, so it has inaugurated a new era in Bitcoin development.
Potential investors can use online mining calculators to know the effectiveness and profitability of special equipment like mining farms.
Mining farm[edit]
Main page: Mining farm
Mining farm – is a data center, technically equipped to mine bitcoins or other cryptocurrencies.
They were emerged as a result of the constant complication of the process, which requires more technical, energy and financial What is bitcoin mining eli5 wikipedia.
Farms allow the productivity of computers and, consequently, the Hash Rate to be maximized. The productivity of the largest farms can be several dozen PH/s (1015 hashes/second).
Physically, farms are rooms with a What is bitcoin mining eli5 wikipedia number of computers and servers that take on tasks for mining.
There are also home-mining farms. They differ from ordinary PCs, by being specially assempled and designed for mining. Home farms can bring profitability, but users often face the problem of excessive electricity consumption and overheating of the computer at home which makes mining unprofitable.
One of the main resources into which a miner has to invest is electricity. It is also a risk factor, since the farm requires a permanent 24/7 power source. In addition, a large number of processors require an appropriate cooling and ventilation system.
Cloud mining[edit]
Main page: Cloud mining
Cloud mining is a process of obtaining Bitcoins with the use of a remote data processing center with the general computational power. This allows the users to mine Bitcoins or alternative crypto currencies without controlling the equipment directly. Most of all, the services of the cloud mining are used by the users from the countries with an expensive electric power supply, which doesn’t allow them to create mining rigs by their own.
Another option is a private virtual service, where a user installs the mining software.
Finally, a user may take the computational powers themselves by using already the results of their work and not coming in touch with physical or virtual servers.
Web mining[edit]
Main page: Web mining
Web-mining, or "hidden mining" – is an alternative method of cryptocurrency mining through the web browsers of users of websites. In fact, owners of Internet resources can convert What is bitcoin mining eli5 wikipedia capacities of visitors' computers into cryptocurrency.
This method is conducted by What is bitcoin mining eli5 wikipedia web-miners - programs that can work when the user's browser is switched on or runs in the background. Technically, such a program can be started on the computer with a line of JavaScript code written on the page, or the code itself is embedded into the browser extension. There are also viruses that make computer capacities work for cryptocurrency mining.
Mining profit[edit]
Main page: Mining profit
Profitability of mining is the level of reward that a user of the blockchain network receives (providing of his technical capacities What is bitcoin mining eli5 wikipedia verifying transactions and solution of network tasks, resulting in a new data block on the network).
The profitability depends on two related factors. The first one consists in the complexity of the process itself, on which the reward depends (the more difficult the process is, the smaller What is bitcoin mining eli5 wikipedia of tasks can be made per technical resource unit and, consequently, the less reward you will receive). The second factor is the cost of bitcoin (or other crypto What is bitcoin mining eli5 wikipedia. That is, how much your reward is in terms of fiat currencies.
The average annual profitability ranges from 120 to 200% per annum, and for some products in the period of "mining boom" from the end of 2016 showed even the best result. However, this indicator does not take into account additional investments: rental of premises, management of farms and energy costs. Adjusted for these factors in 2016, the profitability of mining amounted What is bitcoin mining eli5 wikipedia about 10-50% per annum.
Mining Hardware[edit]
Specifically for Bitcoin, the number of mining types has significantly decreased. If other cryptocurrencies can still be mined using video cards, processors, hard drives, etc., then the high complexity of Bitcoin mining makes all these methods not only inefficient, but even unprofitable.
CPU[edit]
A central processing unit (or CPU) is an integrated circuit that is an essential What is bitcoin mining eli5 wikipedia of the hardware of a personal computer or any other equipment. Currently, any modern, high-performance computer is equipped with a powerful central processor with a high frequency of operation and several cores. Accordingly, if a miner has a good personal computer, then he will not have to invest hundreds or thousands of dollars in equipment.
GPU[edit]
Mining on a video card is the process of mining cryptocurrency using graphic processors (GPUs). To do this, user needs a powerful video card in his home computer or a specially assembled farm of several devices in one system. If miner is interested in why GPUs are used for this process, then the answer is very simple. The thing is that video cards are initially developed to process a large amount of data by performing the same operations, as is the case with video processing. The same picture is observed in cryptocurrency mining, because here the hashing process is just the same. See the main article: Why a GPU mines faster than a CPU.
FPGA[edit]
FPGA stands for Field Programmable Gate Array. The microcircuit is a semiconductor. Used in cases where the device is designed to perform logical operations, such as and, or, nand and others.
ASIC[edit]
An application-specific integrated circuit, or ASIC, is just a chip designed solely for one type of work – decryption of a specific algorithm. To What is bitcoin mining eli5 wikipedia Bitcoins, this is SHA-256. Due to the lack of multitasking, devices show significantly more power than those that are suitable for all algorithms at once.
Mining Hardware Comparison[edit]
| ✔️ | - | - | ✔️ | ✔️ |
| - | ✔️ | ✔️ | ✔️ | ✔️ |
| ✔️ | - | ✔️ | - |
To describe the table above, ASIC uses a lot of electricity, has a high price and very user-friendly but the price is expensive and ASIC can't change the mining algorithm. Meanwhile, GPU is using a fairly low power compared to ASIC, can adapt to various algorithms, cheap compared to other options, easy to get, and easy to use. Finally, FPGA can change algorithm but not user-friendly, you'll need to be able to create a Verilog program. Also, FPGA was quite expensive and hard to get, but now you can find them easily and cheaply online. In terms of hashing speed, CPU < GPU < FPGA < ASIC.
History[edit]
Bitcoin's public ledger (the blockchain) was started on January 3rd, 2009 at 18:15 UTC presumably by Satoshi Nakamoto. The first block is known What is bitcoin mining eli5 wikipedia the genesis block. The first transaction recorded in the first block was a single transaction paying the reward of 50 new bitcoins to its creator. Blockchain mining.
See Also on BitcoinWiki[edit]
Resources[edit]
The mining ecosystem
Network types
Bitcoin Mining, Explained
Chances are you hear the phrase “bitcoin mining” and your mind begins to wander to the Western fantasy of pickaxes, dirt and striking it rich. As it turns out, that analogy isn’t too far off.
Far less glamorous but equally uncertain, bitcoin mining is performed by high-powered computers that solve complex computational math problems (that is, so complex that they cannot be bitcoun by hand, and indeed complicated enough to tax even incredibly powerful computers). The luck and work required by a computer to solve one of these problems is the equivalent of a miner striking gold in the ground — while digging in a sandbox. At the time of writing, the chance of a computer solving one of these problems is about 1 in 13 trillion, but more on that later.
The result of “bitcoin mining” is wikipevia. First, when computers solve these complex math problems on the Bitcoin network, they produce new bitcoin (when referring to the individual coins themselves, "bitcoin" typically appears without capitalization), not unlike when a mining operation extracts gold from the ground. And second, by solving computational math problems, bitcoin miners make the Bitcoin sikipedia network trustworthy and secure, by verifying its transaction information.
There’s a good aikipedia all of that only made so much sense. In order to explain how bitcoin mining works wnat greater detail, let’s begin with a process that’s a little bit closer to home: the regulation of printed currency.
Bitcoin Basics: How Bitcoin Differs From Traditional Currencies
Consumers tend to trust printed currencies, at least in the United States. That’s because the U. S. dollar is backed by a central bank called the Federal Reserve. In addition to a host of other responsibilities, the Federal Reserve regulates the production of new money, and the federal government prosecutes the use of counterfeit currency.
Even digital payments using the U. S. dollar are backed by a central authority. When you make an online purchase using your debit or credit card, for example, that transaction is processed by a payment processing company such as Mastercard or Visa. In addition to recording your transaction history, those companies verify that transactions are not fraudulent, which is one reason your debit or credit card may be suspended while traveling.
Bitcoin, on the other hand, is not regulated by a central authority. Instead, Bitcoin is backed by millions of computers across the world called “nodes.” This network of computers performs the same function as the Federal Reserve, Visa and Mastercard, but with a few key differences. Nodes store information about prior transactions and help to verify their authenticity. Unlike those central authorities, however, Bitcoin nodes are spread out across the world and record transaction data in a public list that can be accessed by What is bitcoin mining eli5 wikipedia, even you.
Bitcoin Basics: What Is Cryptocurrency Mining?
When someone makes a purchase or sale using bitcoin, we call that a “transaction.” Transactions made in-store and online are documented by banks, point-of-sale systems, and physical receipts. Bitcoin miners achieve the same effect without botcoin institutions by clumping transactions together in “blocks” and adding them to a public record called the “blockchain.” Nodes then maintain records of those blocks so that they can be verified into the future.
When bitcoin miners add a new block of transactions to the blockchain, part of their job is to make sure that those transactions are accurate. (More on the magic of how this happens in a second.) In particular, bitcoin miners make sure that bitcoin is not being duplicated, a unique quirk of digital currencies called bitoin With printed currencies, duplicating money isn't an issue. Once you spend $20 at the store, that bill is in the clerk’s hands. With digital currency, however, What is bitcoin mining eli5 wikipedia a different story.
Digital information can be reproduced relatively easily, so with Bitcoin and other digital currencies, there is a risk that a spender can make a copy of their bitcoin What is bitcoin mining eli5 wikipedia send it to another party while still holding onto the original. Let's return to printed currency for a moment and say someone tried to duplicate their $20 bill in order to spend both the original and the counterfeit at a grocery store. If a clerk knew that customers were duplicating money, all they would have to do is look at the bills’ serial numbers. If the numbers were identical, the clerk would know the money had What is bitcoin mining eli5 wikipedia duplicated. This analogy is similar to what a bitcoin miner does when they verify new transactions.
Rewarding Miners
With as many as 500,000 purchases and sales occurring in a single day, however, verifying each of those transactions can be a lot of work for miners, which gets at one other key difference between bitcoin miners and the Federal Reserve, Mastercard or Visa. As compensation for their efforts, miners are awarded bitcoin What is bitcoin mining eli5 wikipedia they add a new block of transactions to the blockchain. The amount of new What is bitcoin mining eli5 wikipedia released with each mined block is called the "block reward." The block reward is halved every 210,000 blocks or roughly every 4 years. In 2009, it was 50. In 2013, it was 25, in 2018 it was 12.5, and What is bitcoin mining eli5 wikipedia in the middle of 2020, it will halve to 6.25.
At this rate of halving, the total number of bitcoin What is bitcoin mining eli5 wikipedia circulation will approach a limit of 21 million, making What is bitcoin mining eli5 wikipedia currency more scarce and valuable over time but also What is bitcoin mining eli5 wikipedia costly for miners to produce.
How Does Bitcoin Mining Work?
Here's the What is bitcoin mining eli5 wikipedia. In order for bitcoin miners to actually earn bitcoin from verifying transactions, two things have to occur. First, they must verify 1 megabyte (MB) worth of transactions, bitcin can theoretically be as small as 1 transaction but are more often several thousand, depending on how much data each transaction stores. This is the easy part.
Second, What is bitcoin mining eli5 wikipedia order to add a block of transactions to the blockchain, miners must solve a complex computational math problem, also called What is bitcoin mining eli5 wikipedia "proof of work." What they're actually doing is trying to come up with What is bitcoin mining eli5 wikipedia 64-digit hexadecimal number, What is bitcoin mining eli5 wikipedia a "hash," that is less than or equal to the target hash. Basically, a miner's computer spits out hashes at a rate of megahashes per second (MH/s), gigahashes per second (GH/s), or even terahashes per second (TH/s) depending on the unit, guessing all possible 64-digit numbers until they arrive at a solution. In other words, it's a gamble.
The difficulty level of the most recent block at the time of writing is more than 13 trillion. That is, the chance of a computer producing a hash below the target is 1 in 13 trillion. To put that in perspective, you are about 44,500 times more likely to win the Powerball jackpot with a single lottery ticket than you are to pick the correct hash on a single try. Fortunately, mining computer systems spit out many, many more hash possibilities than that. Nonetheless, mining for bitcoin bitcoih massive amounts of energy and sophisticated computing rigs, but more ix that later as well.
The iw level is adjusted every 2016 blocks, or roughly every 2 weeks, with the goal of keeping rates of mining constant. That is, the more miners there are competing for a solution, the more difficult the problem wikipedix become. The opposite is also true. If computational power is taken wikpiedia of the network, the difficulty adjusts downward to make mining easier.
Explain it Like I'm Five (ELI5)
Here's a helpful analogy to consider:
"Say I tell three friends that I'm thinking of a number between 1 and 100, and I write that number on a wgat of paper and seal it in an envelope. My friends don't have to guess the exact number, they just have to be the first person to guess any number that is less than or equal to the number I am thinking of. And there is no limit to how many guesses they get.
"Let's say Minin thinking of the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B guesses 16 and Friend C guesses 12, then they've both theoretically arrived at viable answers, because 16<19 and 12<19. There is no 'extra credit' for Friend B, even though B's answer was closer to the target answer of 19.
"Now imagine that I pose the 'guess what number I'm thinking of' question, but I'm not asking just three friends, and I'm not thinking of a What is bitcoin mining eli5 wikipedia between 1 and 100. Rather, I'm asking millions of would-be miners and I'm thinking of a 64-digit hexadecimal number. Now you see that it's going to be extremely hard to guess the right answer."
How Can You Compete with Millions of Miners?
If 1 in 13 trillion doesn't sound difficult enough as is, here's the catch to the catch. Not only do bitcoin miners have to come up with the right hash, but they also have to be the first to do it.
Because 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 wikkipedia. Just a decade ago, bitcoin mining could be performed competitively on normal desktop computers. Over time, however, miners realized that graphics cards commonly used for video games were more effective and they began to dominate the game. In 2013, bitcoin miners started to use computers designed specifically for mining cryptocurrency as efficiently as possible, called Application-Specific Integrated Circuits nitcoin. These can run from several hundred What is bitcoin mining eli5 wikipedia to tens of thousands but their efficiency in mining Bitcoin is superior.
Today, bitcoin mining is so competitive that it can only be done profitably with the most up-to-date ASICs. When using desktop computers, GPUs, or older models of ASICs, the cost of energy consumption actually exceeds the revenue generated. Even with the newest unit at your disposal, one computer is rarely enough to compete with 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 large number of blocks are mined by pools rather than by individual miners. Mining pools and companies have represented large percentages of bitcoin's computing power.
Is Bitcoin Mining Sustainable?
Between 1 in 13 trillion odds, scaling difficulty levels, and wikiperia massive network of users verifying transactions, one block of transactions is verified roughly every 10 minutes. But it’s important to remember that 10 minutes is a goal, not a rule.
The bitcoin network can process about seven transactions per second, with transactions being logged in the blockchain every 10 minutes. For comparison, Visa can process somewhere around 24,000 transactions per second. As the network of bitcoin users continues to grow, however, the number of transactions made in 10 minutes will eventually exceed the number of transactions that can be processed in 10 minutes. At that point, waiting times for transactions will begin and continue to get longer, unless a change is made to the bitcoin protocol.
This issue at the heart of the bitcoin protocol is known as “scaling.” While bitcoin miners generally agree minint something must be done to address scaling, there is less consensus about how to do it. There have been two major solutions proposed to address the scaling problem. Developers have suggested either (1) creating a secondary "off-chain" layer to Bitcoin that would allow for faster transactions that can be verified by the blockchain later, or (2) increasing the number of transactions that each block can store. With less data to verify per block, the Solution 1 would make transactions faster and cheaper for miners. Solution 2 would deal with scaling by allowing for more information to be processed every 10 minutes by increasing block size.
In July 2017, bitcoin miners and mining companies representing roughly 80% to 90% of the network’s computing power voted to incorporate a program that would decrease the amount of data needed to verify mihing block. That is, What is bitcoin mining eli5 wikipedia went with Solution 1.
The program that miners voted to add to the bitcoin protocol is called a segregated witness, or SegWit. This term is an amalgamation of Segregated, meaning “to separate,” and Witness, which refers to What is bitcoin mining eli5 wikipedia on a bitcoin transaction.” Segregated Witness, then, means to separate transaction signatures from a block — and attach them as an extended block. While adding a single program to the bitcoin protocol may not seem like much in the way of a solution, signature data has been estimated What is bitcoin mining eli5 wikipedia account for up to 65% of the data processed in each block of transactions.
Less than a month later in August 2017, a group of miners and developers initiated a hard fork, leaving the bitcoin network to create a new currency using the same codebase as bitcoin. Although this group agreed with the need for a solution to scaling, they worried that adopting segregated witness What is bitcoin mining eli5 wikipedia would not fully address the scaling problem.
Instead, they went with Solution 2. The resulting currency, called “bitcoin cash,” What is bitcoin mining eli5 wikipedia the blocksize to 8 MB el5 order to accelerate the verification process to allow a performance of bigcoin 2 million transactions per day. On November 6, 2019, Bitcoin Cash was valued at about $302 to Bitcoin’s roughly $9,330.
Mining - Bitcoin Wiki
Bitcoin Cash
Cryptocurrency that is a fork of Bitcoin
 |
| BCH[1] |
| 10−8 |
| Bitcoin ABC, Bitcoin Unlimited |
| 0.19.10 / 25 July 2019 (9 months ago) (2019-07-25)[2] |
| Active |
| Bitcoin |
| Bitcoincash. org |
| 3 January 2009 (11 years ago) (2009-01-03)[3][4]:ch. 35 |
| #478559 / 1 August 2017 (2 years ago) (2017-08-01) |
| Bitcoin |
| 1:1 |
| Proof-of-work (partial hash inversion) |
| SHA-256 |
| Initially 50 BCH per block, halved every 210,000 blocks |
| 6.25 BCH [a] |
| 10 minutes |
| Blockchair. com/bitcoin-cash/blocks |
| 21,000,000 BCH[b] |
| ^As of April 2020; halved approximately every four years^The supply will approach, but never reach, 21 million BCH. Issuance will permanently halt c. 2140 at 20,999,999.9769 BCH. |
Bitcoin Cash is a cryptocurrency that is a fork of Bitcoin.[5][6] Bitcoin Cash is a spin-off or altcoin that was created in 2017.[7][8][5] In 2018 Bitcoin Cash subsequently split into two cryptocurrencies: Bitcoin Cash, and Bitcoin SV.[9] Bitcoin Cash is sometimes also referred to as Bcash.[10]
History
The need to accommodate an increasing count of transactions per What is bitcoin mining eli5 wikipedia contributed to a push by some in the community to create a hard fork to increase the block size limit.[11] This push came to a head in July 2017 when some members of the bitcoin community including Roger Ver felt that adopting BIP 91 without increasing the block-size limit favored people who wanted to treat bitcoin as a digital investment rather than as a transactional currency.[12][13] Fortune Magazine in early 2020 referred to Roger Ver as the co-creator of Bitcoin Cash.[14] Bitcoin Cash supporters, compared to Bitcoin, were more committed to a medium of exchange function.[15] This push by some to increase the block size met a resistance. Since its inception up to July 2017, Bitcoin users had maintained a common set of rules for the cryptocurrency.[12] Eventually, a group of bitcoin activists,[16] investors, entrepreneurs, developers[12] and largely China-based miners were unhappy with Bitcoin's proposed SegWit improvement plans meant to increase capacity and pushed forward alternative plans for a split which created Bitcoin Cash.[17] Segwit controversially would later enable second layer solutions on bitcoin such as the Lightning Network, and this controversy led to the split that created Bitcoin Cash.[15] The proposed split included a plan to increase the number of transactions its ledger can process by increasing the block size limit to eight megabytes.[12][13]
The would-be hard fork with an expanded block size limit was described by hardware manufacturer Bitmain in June 2017 as a "contingency plan" should What is bitcoin mining eli5 wikipedia bitcoin community decide to fork implementing SegWit; the first implementation of the software was proposed under the name Bitcoin ABC at a conference that month. In July 2017, the Bitcoin Cash name was proposed by mining pool ViaBTC. The change, called a Fork, took effect on 1 August 2017. As a result, the bitcoin ledger called the blockchain and the cryptocurrency split in two.[18]
A Hong Kong newspaper likened this to a new version of word processing software saying:
Bitcoin cash is like a new version of Microsoft Word, which generates documents that can no longer be opened via the older versions.[19]
Bryan Kelly, a stock analyst likened it to a software upgrade:
Bitcoin cash is doing a “hard fork” or “effectively a software upgrade,” Kelly said on “Fast Money.” “When you do a software upgrade, everybody usually agrees. But in this particular case, everybody is not agreeing.”[20]
At the time of the software upgrade (also known as a fork) anyone owning bitcoin came into possession of the same number of Bitcoin Cash units.[21][18] The technical difference between Bitcoin Cash and Bitcoin is that Bitcoin Cash allows larger blocks in its blockchain than Bitcoin, which in theory allows it to process more transactions per second.[22] Bitcoin Cash was the What is bitcoin mining eli5 wikipedia of the Bitcoin forks, in which software-development teams modified the original Bitcoin computer code and released coins with “Bitcoin" in their names, with "the goal of creating money out of thin air."[23] In relation to Bitcoin it is characterized variously as a spin-off,[5] a strand,[24] a product of a hard fork,[25] an offshoot,[26] a clone,[17] a second version[16] or an altcoin. On 1 August 2017 Bitcoin Cash began trading at about $240, while bitcoin traded at about $2,700.[18]
A key difference of opinion between bitcoin cash and bitcoin camps was over the running of nodes. Bitcoin supporters wanted to What is bitcoin mining eli5 wikipedia blocks small so that nodes could What is bitcoin mining eli5 wikipedia operated with less resources, while some bitcoin cash supporters find it acceptable that (due to large block sizes), nodes What is bitcoin mining eli5 wikipedia only be run by universities, private companies and nonprofits.[27]
In 2018 Bitcoin Core developer Cory Fields found a bug in the Bitcoin ABC software that would have allowed an attacker to create a block causing a chain split. Fields notified the development team about it and the bug was fixed.[28]
Controversy
Controversy
“The arguments have devolved over three or four years of bitter debate, the principles are real and they What is bitcoin mining eli5 wikipedia important to preserve, but a lot of the drama has nothing to do with principles anymore. A lot of this debate is now more about hurt feelings. It’s about bruised egos. It’s about things that were said that can’t be unsaid, insults that were exchanged, What is bitcoin mining eli5 wikipedia personalities and ego.”
Andreas Antonopoulos, "The Verge"
In 2017 there were two factions of bitcoin supporters, those that supported large blocks and those who preferred small blocks.[22] The Bitcoin Cash faction favors the use of its currency as a medium of exchange for commerce while the Bitcoin-supporting faction view bitcoin's primary use as that of a store of value.[22] Bitcoin Cash detractors call the cryptocurrency "Bcash," "Btrash," or "a scam", while its supporters What is bitcoin mining eli5 wikipedia that "it is the pure form of bitcoin".[22]
Samson Mow of Blockstream pointed to Bitcoin Cash's use of the "Bitcoin" name as a source of animosity between the Bitcoin and Bitcoin Cash camps.[22]Emin Gün Sirer, a What is bitcoin mining eli5 wikipedia at Cornell stated that Bitcoin Cash was focused on use and Bitcoin was "enormously" focused on store of value.[22]
Trading and usage
Bitcoin Cash trades on digital currency exchanges including Bitstamp,[30]Coinbase,[31]Gemini,[32]Kraken,[33]Bitfinex, and ShapeShift using the Bitcoin Cash name and the BCH ticker symbol for the cryptocurrency. On 26 March 2018, OKEx removed all What is bitcoin mining eli5 wikipedia Cash trading pairs except for BCH/BTC, BCH/ETH and BCH/USDT due to "inadequate liquidity".[5] As of May 2018[update], daily transaction numbers for Bitcoin Cash are about one-tenth of those of bitcoin.[5] Coinbase listed Bitcoin Cash on December 19, 2017 and the coinbase platform experienced price abnormalities that led to an insider trading investigation.[34]
By November 2017 the value of Bitcoin Cash, which had been as high as $900, had fallen to around $300, much of that due to people who had originally held Bitcoin selling off the Bitcoin Cash they received at the hard fork.[11] On 20 December 2017 it reached an intraday high of $4,355.62 and then fell 88% to $519.12 on 23 August 2018.[35]
As of August 2018, Bitcoin Cash payments are supported by payment service providers such as BitPay, Coinify and GoCoin.[36]
Difficulty adjustment algorithm
Both Bitcoin, as well as Bitcoin Cash, use a proof-of-work algorithm to timestamp every new block. The proof of work algorithm used is the same in both cases. It can be described as a partial inversion of a hash function. Additionally, both Bitcoin and Bitcoin Cash target a new block to be generated every ten minutes on average. The time needed to calculate a new block is influenced by a parameter called the mining difficulty. If the total amount of mining power increases, an increase of the mining difficulty can keep the block time roughly constant. Vice versa, if the mining power decreases, a decrease of the mining difficulty can keep the block time roughly constant.[37]
To keep the block generation time equal to ten minutes on average, both Bitcoin What is bitcoin mining eli5 wikipedia Bitcoin Cash use an algorithm adjusting the mining difficulty parameter. This algorithm is called the Difficulty adjustment algorithm (DAA). Originally, both Bitcoin and Bitcoin Cash used the same difficulty adjustment algorithm, adjusting the mining difficulty parameter every 2016 blocks. Since 1 August 2017, Bitcoin Cash also used an addition to the DAA, called an Emergency Difficulty Adjustment (EDA) algorithm. What is bitcoin mining eli5 wikipedia was used alongside the original DAA and it was designed to decrease the mining difficulty of Bitcoin Cash by 20%, if the time difference between 6 successive blocks was greater than 12 hours.[37]
EDA adjustments caused instabilities in mining difficulty of the Bitcoin Cash system, resulting in Bitcoin Cash being thousands of blocks ahead of Bitcoin. To address the problem with stability, a change of the Bitcoin Cash DAA was implemented and the EDA canceled. The change took effect on 13 November 2017. After the change, the Bitcoin Cash DAA adjusts the mining difficulty after each block. To calculate the difficulty for a new block, the Bitcoin Cash DAA uses a What is bitcoin mining eli5 wikipedia window of last 144 blocks.[37]
A group of researchers demonstrated that, as of June 2019, Bitcoin DAA fails to generate new blocks at a constant rate as long as the hash supply is elastic. In contrast to that, the group demonstrated that Bitcoin Cash DAA is stable even when the cryptocurrency price is volatile and the supply of hash power is highly elastic.[38]
2018 split to create Bitcoin SV
On 15 November 2018, a hard fork chain split of Bitcoin Cash occurred between two rival factions called Bitcoin Cash and Bitcoin SV.[39][40] On 15 November 2018 Bitcoin Cash traded at about $289 and Bitcoin SV traded at about $96.50, down from $425.01 on 14 November for the un-split Bitcoin Cash.[41]
The split originated from what was described as a "civil war" in two competing bitcoin cash camps.[20][42] The first camp, supported by entrepreneur Roger Ver and Jihan Wu of Bitmain, promoted the software entitled Bitcoin ABC (short for Adjustable Blocksize Cap) which would maintain the block size at 32MB.[42] The second camp led by Craig Steven Wright and billionaire Calvin Ayre put forth a competing software version Bitcoin SV, short for "Bitcoin Satoshi Vision," that would increase the block size limit to 128MB.[39][42]
See also
References
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- Cuen, Leigh (22 August 2017). "Why Some People Love Bitcoin Cash". International Business Times. Retrieved 2 November 2019.Jeffries, Adrienne (1 May 2018). "A Bitcoin podcaster brilliantly trolled his own hacker". The Verge. Retrieved 2 November 2019.Browne, What is bitcoin mining eli5 wikipedia (20 December 2017). "Litecoin founder Charlie Lee says he's sold all his holdings in the cryptocurrency". What is bitcoin mining eli5 wikipedia. Retrieved 2 November 2019.Jeffries, Adrienne (9 April 2018). "Twitter briefly shut down @Bitcoin, sparking wild conspiracy theories". The Verge. Retrieved 2 November 2019.Shen, Lucinda (8 August 2017). "Bitcoin Just Surged to Yet Another All-Time High". Fortune Magazine. Retrieved 20 June 2018.Ambler, Pamela (9 August 2017). "The Rapid Rise And Fall Of Bitcoin Cash". Forbes. Retrieved 20 June 2018.Graham, Luke (31 July 2017). "A new digital currency is about to be created as the bitcoin blockchain is forced to split in two". CNBC. Retrieved 20 June 2018.Jeffries, Adrianne (12 April 2018). "THE ONE TRUE BITCOIN - Inside the struggle between Bitcoin and Bitcoin Cash". Verge. Retrieved 7 April 2019.Evans, John (10 August 2018). "Cryptocurrency insecurity: IOTA, BCash and too many more". Techcrunch. Retrieved 12 August 2018.Kharpal, Arjun (3 August 2017). "TECH TRANSFORMERS: 'Bitcoin cash' potential limited, but a catalyst could be looming for it to take off". CNBC. Retrieved 2 August 2019.Ou, Elaine (10 December 2017). "An Expert's Guide to Navigating the World of Bitcoin: What is bitcoin mining eli5 wikipedia Q&A between Julie Verhage and Elaine Ou on crypto-assets and the resources involved in bitcoin mining". Bloomberg. Retrieved 2 August 2019.
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External links
Number of Bitcoin Cash transactions per month (logarithmic scale)[29]
Number of Bitcoin SV transactions per month (logarithmic scale)[29]
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