What is the complexity of bitcoin and why is it needed
When planning to mine the world’s first cryptocurrency, many do not think about the current complexity of the Bitcoin network. Meanwhile, this indicator is very important for the cryptocurrency mining process, because it determines how much powerful equipment needs to be used in the process. In this article, we will talk about what the complexity of the bitcoin network is, and try to figure out how it affects the cryptocurrency market as a whole.
Bitcoin complexity is a programmed indicator that determines how complex one unit is. This parameter is entered to limit the issue of coins. Suppose complexity does not increase, but retains its original performance. What will happen? In this case, all coins, the total amount of which is limited to 21 million, will be “mined” in a matter of minutes, which will actually kill the cryptocurrency.
To cope with this, the legendary Satoshi Nakamoto introduced some restrictions into the bitcoin code – the completion time for one blockchain block. Thus, each new block of the circuit should be generated approximately once every 10 minutes. Accordingly, if the hash (total mining equipment capacity) increases, then 2016 blocks recalculate the complexity to maintain a given time.
It is noteworthy that the complexity after recounting can be reduced if the hashing drops, and, accordingly, increased if it grows.
What is the current bitcoin network complexity
Currently, the current complexity of the Bitcoin network is 3,839,316,899,029 N / s, which is the highest rate among all cryptocurrencies. To control the complexity of the bitcoin network, you can use special Internet resources on which the corresponding graphs are presented.
Experts advise evaluating the complexity of the bitcoin network simultaneously from several sources, since the indicator itself is dynamic in nature and this value may change over time.
The complexity of the network is of great importance in the process of mining cryptocurrencies, since the higher it is, the more powerful equipment must be used for mining. Today, this figure has reached such high values that coin mining alone does not make sense at all. Therefore, for those who plan to start Bitcoin mining, experts advise immediately to choose a suitable pool and purchase quite powerful equipment for these purposes.
Natural Bitcoin Mining Restriction
To get as many coins as possible, each miner strives to ensure good performance of his equipment. In addition, many use the processing power of data centers.
However, the number of coins mined should not increase too sharply, because in this way the stock of virtual currencies can quickly be exhausted. In addition, the bitcoin network involves the creation of no more than 21 million coins. But how to limit production when each miner seeks to increase his profit? A complete ban on mining will lead to the destruction of the entire system. That is why, as a natural restriction on bitcoin mining, an indicator of stabilization of bitcoin computing is used.
In the event that the number of coins mined increases sharply, mining conditions change, complicating this process.
What factors determine the complexity
There are no specific cyclical trends in changing network complexity. The size of the miner’s profit is influenced by many factors: the exchange rate, type of pool, block reward and others.
What factors influence network complexity:
- Active development of new technologies and the emergence of more powerful equipment. For the first time, miners faced the complexity of the bitcoin network in 2014, when new equipment called ASIC appeared on the market, the power and hashrate of which is much higher than that of video cards. The system responded to its implementation with increasing complexity to maintain balance.
- The increasing popularity of bitcoin. The increase in the price of bitcoin has led many miners to invest and mine cryptocurrency. As the total capacity of network equipment has grown, so has the degree of complexity.
- Profitability of cryptocurrency investments. The rapid increase in the price of bitcoin attracts those who plan long-term and short-term investments.
- Capacity transfer. Many miners begin to work on the extraction of other cryptocurrencies, but as a result, they switch to bitcoin, which causes an increase in the overall hashrate and the power of the bitcoin network.
- Minor factors. As a rule, they affect the cryptocurrency itself. This includes public sentiment, negative news about hacking crypto exchanges, analyst forecasts and much more. An important aspect is the position of the government regarding not only bitcoin, but also the cryptocurrency market as a whole.
Forecast for the near future
Here, just as in the situation with the public opinion regarding the course of bitcoin, the positions diverge. So, some miners believe that the profit from mining is directly related to the growth of the Bitcoin exchange rate, while others believe that already now you can notice an increase in the stabilization indicators of the Bitcoin network, and are afraid of rate changes.
What can complicate the bitcoin network? Ultimately, the use of even the most powerful equipment, which currently brings high income, can lose relevance. In this situation, miners will have two ways: to completely abandon bitcoin mining and consider the prospect of mining another cryptocurrency or invest money in more powerful equipment.
Moreover, according to experts, all the coins will be mined by 2140.