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Let us say you had one legit $20 and one quite good photocopy of the same $20. If someone were to attempt to spend both the true bill and the fake one, someone that took the problem of looking at either of those invoices' serial numbers would see that they were exactly the same number, and consequently one of them needed to be false.

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

Once a miner has confirmed 1 MB (megabyte) worth 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 information.

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

In order to earn Bitcoin, you need to fulfill 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 right answer to a numeric issue. This process is also known as a proof of work.

The good news: No advanced math or computation is involved. You may have heard that miners are solving difficult mathematical problems--that is 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")  that is less than or equivalent to the hash.

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The bad news: Because 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 Extra resources 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 along with your mining rig's hash rate, the site Cryptocompare offers 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 cheap way to cobble together mining operations.  The photo below is a makeshift, home-made mining machine.  The graphics cards are such rectangular cubes with whirring circles.  Note the sandwich twist-ties holding the pictures cards into the metal pole.

Case in point I 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 have to guess the exact number, they simply have to be the first person to guess any number that is less than or equal to the number I'm thinking of.

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Let us say I'm thinking of the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B guesses 16 and Friend C guesses 12, then they've both theoretically arrived at workable answers, since 16<19 and 12<19. There's no"extra credit" for Friend B, even though B's answer was nearer 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 which can be equivalent to or less than the target number, the Bitcoin network will decide by a simple majority--51%--which miner to honour. Normally, it's the miner that 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'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 ideal answer.

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The number above has 64 digits. Easy enough to understand up to now. As you likely 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 middle of numbers, let us unpack the word"hexadecimal."

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