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Let's say you had one legit $20 and one quite good photocopy of the same $20. If someone were to try to spend both the real bill and the fake one, someone that took the trouble of looking at either of those invoices' serial numbers would observe that they were exactly the same number, and consequently one of them had to be fictitious.

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 can be 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 worth of transactions makes a miner qualified to earn Bitcoin--not everyone who verifies transactions will get paid off.

1MB of transactions can technically be small as 1 transaction (though this is not in any way common) or several thousand. It depends on how much data 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 right 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 challenging mathematical problems--that's not true in any way. What they are actually 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: Since it's guesswork, you need a good deal of computing power in order to get there first. To mine successfully, 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 just how much Bitcoin you could mine along with your mining rig's hash rate, the site 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 photograph below is a makeshift, find home-made mining machine.  The cards are those rectangular blocks with whirring circles.  Note the sandwich twist-ties holding the graphics cards to the metal rod.

Example: I tell three friends I'm thinking about a number between 1 and 100, and that 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 simply have to be the very first person to guess any number that's 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 21they lose because 21>19. If Friend B guesses 16 and Friend C supposes 12, then they've 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 closer to the goal 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%--that 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 that 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'm 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 hard to guess the ideal answer.

20000 Satoshi - Questions

The number above has 64 digits. Easy enough to understand so far. As you probably noticed, that number consists not just of numbers, but also letters of this Your Domain Name alphabet. Why is that

In order to understand these letters are doing in the middle of numbers, let's unpack the word"hexadecimal."

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