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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 real bill and the fake one, someone that took the trouble of looking at either of those bills' serial numbers would see that they had been exactly the same number, and consequently one of them had to be false.

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

Once a miner has confirmed 1 MB (megabyte) worth of Bitcoin transactions, they are entitled to win the 12.5 BTC. The 1 MB limit was established by Satoshi Nakamoto, and is an issue of controversy, as some miners think the block size should 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 receive paid out.

1MB of transactions can theoretically be as little as 1 transaction (though this is not in any way common) or a few 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 work, one is a matter of luck.

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

The good news: No advanced math or computation is involved. You might have heard that miners are solving difficult mathematical problems--that is 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")  that is less than or equivalent to the 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 first. To mine successfully, 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 just how much Bitcoin you can mine along with your mining rig's hash pace, the website Cryptocompare provides a very helpful calculator.

Either a GPU (graphics processing unit) miner or an application-specific integrated circuit (ASIC) miner. These can run from $500 into the tens of thousands.  Some miners--particularly Ethereum miners--buy individual graphics cards (GPUs) as a low-cost way to cobble together mining operations.  The photograph below is a makeshift, high-tech 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.

Case in point I tell three friends that I'm thinking about a number between 1 and 100, and that 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 have to be the first person to figure any number that's less than or equal to the number I am thinking of.

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Let us say I am thinking about the number 19. If Friend A guesses 21they shed because 21>19. If Friend B supposes 16 and Friend C supposes 12, then they have both theoretically arrived at viable you can try these out answers, because 16<19 and 12<19. There is no"extra credit" for Friend B, even though B's answer was closer to the goal answer of 19. .

In Bitcoin terms, simultaneous answers happen frequently, but in the end of the day there can only be one winning answer. When multiple simultaneous answers are presented which can be equivalent to or less than the target number, the Bitcoin network will decide by a simple majority--51 percent --which miner to honour. Typically, 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"guess what number I'm thinking of" question, but I'm not asking just three friends, and I'm not thinking of a number between 1 and 100. Rather, 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 extremely 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 only 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's unpack the word"hexadecimal."

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