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Let's say you had one legit $20 and one quite good photocopy of the same $20. If someone were to try to spend both the real bill and the imitation one, someone who took the problem of looking at both of the invoices' consecutive numbers would observe that they were exactly the same number, and consequently one of them had to be fictitious.

This isn't a great analogy--we will explain in more detail below. .

Once a miner has confirmed 1 MB (megabyte) worthiness of Bitcoin transactions, they are entitled to win the 12.5 BTC. The 1 MB limit was set by Satoshi Nakamoto, and can be a matter of controversy, as some miners think the block size should be increased to accommodate more data.

Note that I said that verifying 1 MB worth of transactions makes a miner eligible to earn Bitcoin--not everyone who verifies transactions will get paid out.

1MB of transactions can theoretically be as small as 1 transaction (though this is not in any way common) or several thousand. It depends on how much information the transactions consume.

In order to earn Bitcoin, you need to fulfill two conditions. One is a matter of effort, one is a matter of luck.

2) You must be the first miner to arrive at the perfect answer to a numeric issue. This process is also known as an evidence of work.

The fantastic news: No advanced math or computation is involved. You may have discovered that miners are solving challenging mathematical problems--that's not true in any way. What they are actually doing is trying to be the first miner to come up with a 64-digit hexadecimal number (a"hash")  which is less than or equivalent to the target hash.

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The bad news: Because it is guesswork, you need a good deal of computing power in order to go to the website get there first. To mine , you need to have a high"hash speed," which is measured in terms of megahashes per second (MH/s), gigahashes per second (GH/s), and terahashes per second (TH/s).

If you want to estimate how much Bitcoin you look at here now can mine along with your mining rig's hash pace, the site Cryptocompare provides a very helpful calculator.

Either way a GPU (graphics processing unit) miner or an application-specific integrated circuit (ASIC) miner. These can run from $500 to the tens of thousands.  Some miners--particularly Ethereum miners--buy individual graphics cards (GPUs) as a low-cost method to cobble together mining operations.  The photograph below is a makeshift, home-made mining machine.  The graphics cards are those rectangular cubes with whirring circles.  Note the sandwich twist-ties holding the pictures cards into the metal rod.

Case in point I tell three friends 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 exact number, they simply must be the very first person to figure any number that is less than or equal to this number I'm thinking of.

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Let us say I am thinking about the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B guesses 16 and Friend C supposes 12, then they've both technically came at viable answers, since 16<19 and 12<19. There's no"extra credit" for Friend B, even though B's answer was nearer to the target answer of 19. .

In Bitcoin terms, simultaneous answers occur frequently, but at the end of the day there can only be one winning answer. When multiple simultaneous answers are presented that are equal to or less than the target number, the Bitcoin network will determine by a simple majority--51%--which miner to honour. Normally, it is the miner who has done the work, i.e.

The losing block then becomes an"orphan block" .

Now imagine that I pose the"figure what number I am thinking of" question, but I'm not asking only three friends, and I'm not thinking of a number between 1 and 100. Rather, I am asking millions of prospective miners and I'm thinking of a 64-digit hexadecimal number. Now you see that it's going to be quite difficult to guess the ideal answer.

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The number preceding has 64 digits. Easy enough to understand so far. As you likely noticed, that number consists not just of numbers, but also letters of this alphabet. Why is that

In order to understand what these letters are doing in the center of numbers, let's unpack the term"hexadecimal."

As you knowwe use the"decimal" system, which means it's base 10. This in turn means that every digit has 10 chances, 0-9.