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

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

Once a miner has verified 1 MB (megabyte) worth of Bitcoin transactions, they are eligible to win the 12.5 BTC. The 1 MB limit was set by Satoshi Nakamoto, and is a matter of controversy, as some miners think 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 out.

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 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 issue. This practice is also known as a proof of work.

The good news: No advanced math or computation is involved. You might have discovered that miners are solving difficult mathematical problems--that's not true in any way. What they are 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 lot of computing power in order to get there . To mine successfully, you need to have a higher"hash speed," which 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 rate, the website Cryptocompare offers a very helpful my company 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 photo below is a makeshift, high-tech mining machine.  The cards are such rectangular cubes with whirring circles.  Note the sandwich twist-ties holding the pictures cards to the metal rod.

Example: I tell three friends 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 exact number, they just must be the first person to guess any number that's less than or equal to the number I'm thinking of.

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Let us say I am thinking of the number 19. If Friend A guesses 21they lose because 21>19. If Friend B guesses 16 and Friend C supposes 12, then they've both theoretically arrived at workable answers, because 16<19 and 12<19. There is no"extra credit" for Friend B, even though B's answer was nearer to the target answer of 19. .

In Bitcoin conditions, simultaneous answers happen frequently, but at 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 percent --which miner to honour. Typically, it's the miner who has done the work, i.e.

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

Now imagine I pose the"figure what number I am thinking of" question, however I'm not asking just 3 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 extremely difficult to guess the ideal answer.

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The number preceding 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 what these letters are doing in the middle of numbers, let us unpack the term"hexadecimal."

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