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

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

Once a miner has verified 1 MB (megabyte) worth of Bitcoin transactions, they are eligible to win the 12.5 BTC. The 1 MB limit was set by Satoshi Nakamoto, and can be an issue of controversy, as some miners believe the block size should be increased to accommodate more data.

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

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

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 reach the perfect answer to some numeric issue. This practice is also known as a proof of work.

The fantastic news: No advanced math or computation is involved. You might have discovered that miners are solving challenging mathematical problems--that is not true at all. What they're actually doing is trying to be the first miner to think of a 64-digit hexadecimal number (a"hash")  which is less than or equal to the target hash.

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The bad news: Since it is guesswork, you need a good deal of computing power in order to get there . To mine successfully, you need to get a higher"hash rate," that 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 just how much Bitcoin you could mine with your mining rig's hash rate, the website 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--purchase individual graphics cards (GPUs) as a cheap method to cobble together mining operations.  The photo below is a makeshift, home-made mining machine.  The graphics cards are such rectangular blocks with whirring circles.  Note the sandwich twist-ties holding the pictures cards continue reading this into the metal rod.

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

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Let us say I am thinking of the number 19. If Friend A guesses 21they shed because 21>19. If Friend B supposes 16 and Friend C supposes 12, then they've both technically came at viable answers, because 16<19 and 12<19. There's no"extra credit" for Friend B, even though B's answer was closer to the goal 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 presented that are equal to site here or less than the target number, the Bitcoin network will determine by a simple majority--51 percent --which miner to honour. Typically, it's the miner who has done the work, i.e.

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

Now imagine that I present the"guess what number I'm thinking of" question, however I am not asking only three friends, and I'm not thinking of a number between 1 and 100. Rather, I am asking millions of would-be miners and I am thinking about a 64-digit hexadecimal number. Now you see that it is going to be extremely hard to guess the ideal 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 what these letters are doing in the middle of numbers, let's 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 chances, 0-9.