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

That isn't a perfect 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 think the block size ought to be increased to accommodate more information.

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 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 fulfill two conditions. One is a matter of work, one is a matter of luck.

2) You have to be the first miner to arrive at the perfect answer to a numeric problem. This process is also known as an evidence 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 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 equivalent to the target hash.

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The bad news: Since it is guesswork, you need a lot of computing power in order to get there first. To mine successfully, you need to have a high"hash rate," 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 could mine with your mining rig's hash rate, the site Cryptocompare offers a 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 way 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 that I'm thinking about 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 specific number, they simply must be the very first person to figure my latest blog post 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 lose because 21>19. If Friend B supposes 16 and Friend C supposes 12, then they've 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 happen frequently, but in 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 percent --which miner to honour. Typically, it is the miner that has done the work, i.e.

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

Now imagine I present the"guess what number I am thinking of" question, however I'm 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'm thinking about a 64-digit hexadecimal number. Now you see that it go now 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 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 what 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 every digit has 10 chances, 0-9.