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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 fake one, someone that took the problem of looking at both of those invoices' consecutive numbers would observe that they were the exact same number, and consequently one of them had to be fictitious.

That 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 a matter of controversy, as some miners believe the block size should be increased to accommodate more information.

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

1MB of transactions can technically be little 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 must be the first miner to arrive at the perfect answer to a numeric problem. This practice is also known as a proof of work.

The fantastic news: No advanced math or computation is involved. You may have discovered that miners are solving challenging mathematical problems--that is not true at all. 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 target hash.

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The bad news: Since it is guesswork, you need a good deal of computing power in order to get there . To mine successfully, you need to get a high"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 just how much Bitcoin you could mine along with your mining rig's hash rate, the website Cryptocompare provides 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--particularly Ethereum miners--purchase individual graphics cards (GPUs) as a low-cost method to cobble together mining operations.  The photograph 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 graphics cards into the metal pole.

Example: I tell three friends that I'm thinking of 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 simply must be the 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 about the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B guesses 16 and Friend C guesses 12, then they have both technically came at viable answers, since 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 Bitcoin Trading History 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 equivalent to or less than the target number, the Bitcoin network will decide by a simple majority--51%--which miner to honour. Normally, it is the miner that has done the work, i.e.

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

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Now imagine that I present the"guess what number I am thinking of" question, but I am not asking only 3 friends, and I'm not thinking of a number between 1 and 100. Rather, I am asking millions of would-be miners and I'm thinking of a 64-digit hexadecimal number. Now you see that it is going to be extremely difficult to guess the ideal answer.

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The number above has 64 digits. Easy enough to understand up to now. 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 middle of numbers, let's unpack the term"hexadecimal."

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

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