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Let us 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 who took the trouble of looking at either of those invoices' serial numbers would see that they had been the exact same number, and consequently one of them had to be false.

That 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 established by Satoshi Nakamoto, and is an issue of controversy, as some miners believe the block size ought to 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 verifies transactions will receive paid out.

1MB of transactions can technically be small as 1 transaction (although 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 perfect answer to a 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 heard that miners are solving challenging mathematical problems--that is not true at all. What they're actually doing is trying to be the first miner to come up with a 64-digit hexadecimal number (a"hash") that is less than or equal to the hash.

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The bad news: Because it is guesswork, you need a good deal of computing power in order to get there first. To mine successfully, you need to have a high"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 offers 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--especially Ethereum miners--purchase individual graphics cards (GPUs) as a cheap method to cobble together mining operations. The photo below is a makeshift, high-tech mining machine. The cards are those rectangular cubes with whirring circles. Note the sandwich twist-ties holding the graphics cards to the metal rod.

Case in point : I tell three friends 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 need to guess the exact number, they simply have to be the very first person to guess any number that is less than or equal to this number I am thinking of.

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Let's say I'm thinking about the number 19. If Friend A guesses 21they shed because 21>19. If Friend B supposes 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 goal answer of 19. .

In Bitcoin terms, 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 determine by a simple majority--51 percent Bitcoin Mining Code --which 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"guess 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 extremely hard to guess the ideal answer.

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The number above has 64 digits. Easy enough to understand so far. As you probably 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 center of numbers, let us unpack the word"hexadecimal."

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