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Let's say you had one legit $20 and one really 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 trouble of looking at both of the bills' consecutive numbers would see that they were exactly the exact same number, and consequently one of them had to be false.

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

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

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

1MB of transactions can theoretically be as little as 1 transaction (although this is not in any way common) or a few thousand. It depends on how much data 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 must be the first miner to reach the perfect answer to a numeric problem. This practice 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 difficult mathematical problems--that's not true at all. What they are 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 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 , 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 can mine with your mining rig's hash pace, the website Cryptocompare offers a 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--purchase individual graphics cards (GPUs) as a cheap way to cobble together mining operations.  The photograph below is a makeshift, home-made mining machine.  The cards are read this those rectangular cubes with whirring circles.  Note the sandwich twist-ties imp source holding the graphics cards into the metal rod.

ExampleI tell three friends that I'm thinking of 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 specific number, they simply must be the first person to guess any number that is less than or equal to this number I'm thinking of.

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Let us say I'm 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 theoretically arrived 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 target 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 that are equal to 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 most work, i.e.

The losing block then becomes an"orphan block" .

Now imagine that I present the"guess what number I am thinking of" question, but I am not asking just three friends, and I'm not thinking of a number between 1 and 100. Instead, I am asking millions of would-be miners and I'm thinking of a 64-digit hexadecimal number. Now you see that it is going to be extremely hard to guess the right answer.

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The number above has 64 digits. Easy enough to understand up to now. As you probably noticed, that number consists not only of numbers, but also letters of the 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 know, we use the"decimal" system, which means it's base 10. This in turn means that each and every digit has 10 chances, 0-9.