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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 who took the trouble of looking at either of those invoices' consecutive numbers would observe that they were exactly the exact same number, and thus one of them had to be false.

This 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 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 eligible to earn Bitcoin--not everyone who supports transactions will get paid off.

1MB of transactions can theoretically be as little as 1 transaction (although this is not at all 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 effort, one is a matter of luck.

2) You must be the first miner to arrive at the right answer to some numeric issue. This process is also known as a proof of work.

The fantastic news: No advanced math or computation is involved. You might have heard that miners are solving challenging mathematical problems--that's not true at all. 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: Because it's guesswork, you need a good deal of computing power in order to get there . 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 could mine along with your mining rig's hash rate, the website Cryptocompare provides a 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--particularly Ethereum miners--buy individual graphics cards (GPUs) as a low-cost way to cobble together mining operations.  The photo below is a makeshift, high-tech mining machine.  The graphics cards are such rectangular blocks with whirring circles.  Note the sandwich twist-ties holding the graphics cards to the metal pole.

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

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Let's say I'm thinking of the number 19. If Friend A guesses 21they shed because 21>19. If Friend B supposes 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 special info Friend B, even though B's answer was nearer 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 which can be equal to or less than the target number, the Bitcoin network will determine by a simple majority--51%--that 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 I pose the"guess what number I am thinking of" click reference question, however 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 prospective miners and I am thinking of a 64-digit hexadecimal number. Now you see that it's going to be extremely hard to guess the ideal 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 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 every digit has 10 chances, 0-9.