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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 try to spend both the true bill and the fake one, someone who took the problem of looking at both of those invoices' serial numbers would observe that they were the exact same number, and consequently one of them needed to be fictitious.

That isn't a perfect 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 established by Satoshi Nakamoto, and can be a matter of controversy, as some miners believe 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 eligible to earn Bitcoin--not everyone who verifies transactions will receive paid off.

1MB of transactions can theoretically be as little as 1 transaction (although this is not at all common) or several thousand. It depends on how much information the transactions consume.

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

2) You have to be the first miner to arrive at the perfect answer to some numeric issue. This process is also known as a proof 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 at all. What they're doing is trying to be the first miner to think of a 64-digit hexadecimal number (a"hash")  which 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 . To mine successfully, you need to have a higher"hash speed," 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 just how much Bitcoin you can mine with your mining rig's hash rate, the site Cryptocompare offers a helpful calculator.

Either 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 cheap way to cobble together mining operations.  The photo below is a makeshift, home-made mining machine.  The graphics cards are those rectangular blocks with whirring circles.  Note the sandwich twist-ties holding the graphics cards to the metal pole.

ExampleI tell three friends that I'm thinking of a number between 1 and 100, and I write that number on a sheet of paper and my link seal it in an envelope. My friends don't need to guess the specific number, they simply must be the very first person to figure any number that's less than or equal to the number I am thinking of.

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Let's say I am thinking of the number 19. If Friend A guesses 21they lose because 21>19. If Friend B supposes 16 and Friend C guesses 12, then they have 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 closer to the target answer of 19. .

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

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

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

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

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

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