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Let's 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 fake one, someone who took the trouble of looking at either of the invoices' serial numbers would see that they were exactly the same number, and thus one of them had to be fictitious.

This isn't a perfect analogy--we will 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 can be a matter of controversy, as some miners believe the block size ought to be increased to accommodate more data.

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

1MB of transactions can theoretically be as little as 1 transaction (though this is not at all common) or a few thousand. It depends on how much information the transactions consume.

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 have to be the first miner to reach the perfect answer to some numeric issue. This practice is also known as a proof of work.

The fantastic news: No advanced math or computation is involved. You might have discovered that miners are solving difficult mathematical problems--that is not true in any way. What they're 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's guesswork, you need a good deal of computing power in order to get there first. To mine , you need to have a high"hash speed," 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 to estimate just how much Bitcoin you can mine with your mining rig's hash pace, the site Cryptocompare provides a helpful calculator.

Either 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--especially Ethereum miners--buy individual graphics cards (GPUs) as a cheap way to cobble together mining operations.  The photo below is a makeshift, high-tech mining machine.  The cards are those 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 I'm thinking about 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 just must be the very first person to figure any number that is less than or equal to the number I'm thinking of.

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Let's say I'm thinking about the number 19. If Friend A guesses 21they lose because 21>19. If Friend B guesses 16 and Friend C guesses Bonuses 12, then they have both technically came at workable answers, because 16<19 and 12<19. There's no"extra credit" for Friend B, even though B's answer was nearer to the target answer of 19. .

In Bitcoin terms, simultaneous answers occur frequently, but at 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. Typically, it's the miner that has done the work, i.e.

The losing block then becomes an"orphan block." .

Now imagine I present the"figure what number I am thinking of" question, however I'm not asking just three friends, and I am not thinking of a number between 1 and 100. Instead, I am asking millions of would-be miners and I am thinking about a 64-digit hexadecimal number. Now you see that it's going to be quite difficult to guess the right 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 term"hexadecimal."

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