About How Bitcoins Are Made

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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 true bill and the fake one, someone that took the problem of looking at both of those invoices' consecutive numbers would observe that they were exactly the exact same number, and thus one of them needed to be false.

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

Once a miner has confirmed 1 MB (megabyte) worth of Bitcoin transactions, they are eligible 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 data.

Note that I said that verifying 1 MB worth of transactions makes a miner qualified to earn Bitcoin--not everyone who verifies transactions will get 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 take up.

In order to earn Bitcoin, you need to meet 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 right 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 difficult mathematical problems--that's not true at all. What they're 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's guesswork, you need a good deal of computing power in order to get there first. To mine successfully, you need to get a higher"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 how much Bitcoin you could mine along with your mining rig's hash pace, the site Cryptocompare offers 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 way to cobble together mining operations.  The photograph 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 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 have to guess the exact number, they just have to be the very first person to guess any number that's less than or equal to the number I am 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 read what he said B supposes 16 and Friend C guesses 12, then they've both theoretically arrived 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 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 that are equal to or less than the target number, the Bitcoin network will determine by a simple click reference majority--51%--that miner to honour. Normally, it is the miner that has done the most work, i.e.

 

 

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

 

 

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Now imagine visit their website that I pose the"figure what number I am thinking of" question, but I am not asking just 3 friends, and I am not thinking of a number between 1 and 100. Rather, I am asking millions of prospective miners and I am thinking about a 64-digit hexadecimal number. Now you see that it's going to be quite difficult to guess the right answer.

 

 

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The number preceding 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 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 every digit has 10 chances, 0-9.

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