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Let's say you had one legit $20 and one really good photocopy of the same $20. If someone were to attempt to spend both the real bill and the imitation one, someone that took the problem of looking at both of the invoices' consecutive numbers would see that they were exactly the exact same number, and thus one of them had to be fictitious.

That isn't a perfect analogy--we'll explain in more detail below. .

Once a miner has confirmed 1 MB (megabyte) worthiness of Bitcoin transactions, they are entitled to win the 12.5 BTC. The 1 MB limit was established by Satoshi Nakamoto, and can be an issue of controversy, as some miners believe the block size should be increased to accommodate more data.

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

1MB of transactions can theoretically be as little as 1 transaction (though this is not at all common) or several 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 must 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 challenging mathematical problems--that's not true at all. What they're doing is trying to be the first miner to think of a 64-digit hexadecimal number (a"hash")  that is less than or equivalent 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 , you need to have 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 pace, the site Cryptocompare provides a very helpful calculator.

Either a GPU (graphics processing unit) miner or an his response 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 cheap way to cobble together mining operations.  The photo below is a makeshift, home-made mining machine.  The cards are those rectangular cubes with whirring circles.  Note the sandwich twist-ties holding the graphics cards to the metal pole.

Case in point : I tell three friends that 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 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 us 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 guesses 12, then they've both theoretically arrived at workable 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 conditions, 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 equal to or less than the target number, the Bitcoin network will decide by a simple majority--51%--that miner to honour. Normally, it's the miner who has done the most work, i.e.

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

Now imagine I present the"guess what number I'm thinking of" question, however I am not asking just 3 friends, and I'm not thinking of a number between 1 and 100. Instead, I'm asking millions of prospective miners and I am thinking of a 64-digit hexadecimal number. Now you see that it is going to be quite hard to guess the ideal answer.

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The number above has 64 digits. Easy enough to understand up to now. As you probably noticed, that number consists not only 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's unpack the word"hexadecimal."

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