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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 trouble of looking at either of those bills' consecutive numbers would observe that they were the exact same number, and thus one of them needed to be fictitious.

This isn't a great analogy--we will explain in more detail below. .

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

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

1MB of transactions can technically be small as 1 transaction (though this is not at all common) or a few thousand. It depends on how much information the transactions take up.

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 right answer to some numeric problem. 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 difficult mathematical problems--that's not true in any way. What they're 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 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 higher"hash speed," which is quantified in terms of megahashes per second site here (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 with your mining rig's hash pace, the site Cryptocompare offers a very 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--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 such rectangular blocks with whirring circles.  Note the sandwich twist-ties holding the pictures cards into the metal pole.

Case in point : I tell three friends I'm thinking about a number between 1 and 100, and I write that number on a sheet of paper and seal it in an envelope. My friends don't need to guess the exact 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 us say I'm thinking of the number 19. If Friend A guesses 21they shed because 21>19. If Friend B guesses 16 and Friend C guesses 12, then they have both technically came at viable answers, because 16<19 and 12<19. There is no"extra credit" for Friend B, even though B's answer was closer 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 equivalent to or less than the target number, the Bitcoin network will decide by a simple majority--51%--that miner to honour. Typically, it is the miner that has done the most work, i.e.

The losing block then becomes an"orphan block" .

Now imagine I pose the"figure what number I am thinking of" question, but I am not asking just three friends, and I'm not thinking of a number between 1 and 100. Rather, I'm asking millions of would-be 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 just of numbers, but also letters of the alphabet. Why is that

In order to understand these letters are doing in the center 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.