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Let's say you had one legit $20 and one really good photocopy of the same $20. If someone were to attempt to spend both the true bill and the imitation one, someone who took the problem of looking at either of those invoices' consecutive numbers would see that they were exactly the same number, and consequently one of them needed 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 eligible to win the 12.5 BTC. The 1 MB limit was set by Satoshi Nakamoto, and is an issue of controversy, as some miners think the block size ought to be increased to accommodate more data.

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

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

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

2) You have to be the first miner to arrive at the right answer to a numeric problem. This practice is also known as a proof of work.

The good news: No advanced math or computation is involved. You might have heard that miners are solving challenging mathematical problems--that's not true in any way. What they are doing is trying to be the first miner to think of a 64-digit hexadecimal number (a"hash")  that is less than or equivalent to the hash.

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The bad news: Since it's guesswork, you need a good deal of computing power in order to get there first. To mine , you need to have a higher"hash rate," that is quantified 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 could mine with your mining rig's hash pace, the site Cryptocompare offers 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--especially 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 cards are those rectangular blocks with whirring circles.  Note the sandwich twist-ties holding the graphics cards to the metal pole.

Example: I tell three friends I'm thinking about a number between 1 and 100, and I write that number on a sheet 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 have a peek here that's less than or equal to the number I'm thinking of.

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Let's say I am thinking of the number 19. If Friend A guesses 21they shed because 21>19. If Friend B guesses 16 and Friend C supposes 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. .

In Bitcoin conditions, simultaneous answers occur frequently, but in 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 decide by a simple majority--51%--that miner to honour. Typically, it's the miner that has done the work, i.e.

The losing block then becomes an"orphan block." .

Now imagine I pose the"guess what number I'm thinking of" question, however I'm not asking only 3 friends, and I am not thinking of a number between 1 and 100. Rather, I am asking millions of prospective miners and I am thinking of a 64-digit hexadecimal number. Now you see that it is going to be quite hard to guess the right answer.

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

In order to understand these letters are doing in the center of numbers, let us unpack the word"hexadecimal."

As you knowwe utilize the"decimal" system, which means it is base 10. This in turn means that each and every digit has 10 possibilities, 0-9.