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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 true bill and the imitation one, someone who took the problem of looking at both of those bills' consecutive numbers would see that they were the same number, and thus one of them needed to be fictitious.

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 receive paid off.

1MB of transactions can theoretically be as little as 1 transaction (although this is not in any way common) or several thousand. It depends on how much data 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 must be the first miner to arrive at the perfect answer to a numeric problem. This process is also known as an evidence of work.

The good news: No advanced math or computation is involved. You may have heard that miners are solving challenging mathematical problems--that is not true in any way. What they are doing is trying to be the first miner to think of a 64-digit hexadecimal number (a"hash") which is less than or equal to the target hash.

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The bad news: Because it is guesswork, you need a lot of computing power in order to get there first. To mine successfully, you need to have a high"hash rate," 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 how much Bitcoin you could mine with your mining rig's hash pace, the website 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--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 graphics cards are those rectangular blocks with whirring circles. Note the sandwich twist-ties holding the pictures cards into the metal rod.

Case in point I tell three friends that I'm thinking of 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 go to website to guess the specific number, they simply 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 am thinking of the number 19. If Friend A guesses 21, they shed because 21>19. If Friend B supposes 16 and Friend C supposes 12, then they have both theoretically arrived at viable answers, since 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 terms, simultaneous answers happen frequently, but at the end of the day there can only be one winning answer. When multiple simultaneous answers are presented that are equivalent to or less than the target number, the Bitcoin network will determine by a simple majority--51 percent --which miner to honour. Typically, it is the miner that has done the work, i.e.

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

Now imagine I present the"guess what number I am thinking of" question, but I am not asking just three friends, and I am not thinking of a number between 1 and 100. Rather, I'm asking millions of prospective miners and I am thinking about a 64-digit hexadecimal number. Now you see that it is going to be quite hard to guess the right 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 this alphabet. Why is that

In order to understand these letters are doing in the middle of numbers, let us unpack the term"hexadecimal."

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