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Let's 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 fake one, someone who took the problem of looking at either of those invoices' consecutive numbers would see that they were exactly the same number, and thus one of them needed to be false.

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

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

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

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 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 a numeric issue. This process is also known as an evidence of work.

The good news: No advanced math or computation is involved. You might have heard that miners are solving challenging mathematical problems--that is not true at all. What they are doing is trying to be the first miner to come up with 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 . To mine , you need to have a higher"hash speed," which 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 how much Bitcoin you can mine along with your mining rig's hash rate, the website 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 to 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, home-made mining machine.  The cards are such rectangular cubes with whirring circles.  Note the sandwich twist-ties holding the pictures cards into the metal rod.

ExampleI tell three friends that 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 have see page to guess the exact number, they simply must be the very first person to figure any number that's less than or equal to this number I am thinking of.

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

In Bitcoin terms, simultaneous answers occur frequently, but in 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 determine by a simple majority--51%--that 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 that I pose the"figure what number I am thinking of" question, however I am not asking only 3 friends, and I am not thinking of a number between 1 and 100. Instead, I am 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 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 this alphabet. Why is that

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

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