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Let's say you had one legit $20 and one quite good photocopy of the same $20. If someone were to try to spend both the true bill and the imitation one, someone that took the problem of looking at either of those bills' consecutive numbers would see that they had been the same number, and consequently one of them had to be fictitious.

That isn't a great analogy--we will 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 is an issue of controversy, as some miners believe the block size should be increased to accommodate more information.

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

1MB of transactions can theoretically be as small as 1 transaction (although this is not in any way 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 effort, one is a matter of luck.

2) You have to be the first miner to reach the right answer to a numeric problem. This practice is also known as a proof of work.

The good 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 equivalent to the target hash.

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The bad news: Since it's guesswork, you need a lot of computing power in order to get there first. To mine , you need to have 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 navigate to this website to estimate how much Bitcoin you can mine along with your mining rig's hash pace, the website Cryptocompare provides 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 into the tens of thousands.  Some miners--especially Ethereum miners--purchase individual graphics cards (GPUs) as a low-cost method to cobble together mining operations.  The photo below is a makeshift, home-made mining machine.  The cards are such rectangular blocks with whirring circles.  Note the sandwich twist-ties holding the pictures cards into the metal pole.

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

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Let's say I'm thinking about the number 19. If Friend A guesses 21, they shed because 21>19. If Friend B guesses 16 and their explanation Friend C supposes 12, then they've both technically came at viable answers, because 16<19 and 12<19. There is 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 that are equal to or less than the target number, the Bitcoin network will decide by a simple majority--51 percent --which miner to honour. Typically, it's the miner that 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'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 would-be miners and I am thinking of a 64-digit hexadecimal number. Now you see that it's going to be quite 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 click to read 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 us unpack the word"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 possibilities, 0-9.