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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 attempt to spend both the true bill and the fake one, someone who took the problem of looking at either of the bills' consecutive numbers would observe that they were exactly the exact same number, and thus one of them had to be fictitious.

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

Once a miner has confirmed 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 is an issue of controversy, as some miners believe the block size ought to be increased to accommodate more information.

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

1MB of transactions can theoretically be as little as 1 transaction (though this is not in any way 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 have to be the first miner to reach the right answer to a numeric issue. This process is also known as a proof of work.

The good news: No advanced math or computation is involved. You may have heard that miners are solving challenging mathematical problems--that's not true at all. What they're doing is trying to be the first miner to think of a 64-digit hexadecimal number (a"hash")  which is less than or equal to the target hash.

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The bad news: Because it's guesswork, you need a lot of computing power in order to get there next first. To mine , you need to get a higher"hash rate," that is measured 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 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--especially Ethereum miners--buy individual graphics cards (GPUs) as a low-cost method to cobble together mining operations.  The photo below is a makeshift, home-made mining machine.  The graphics cards are such rectangular cubes 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 piece of paper and seal it in an envelope. My friends don't need to guess the exact number, they just must be the first person to guess any number that is less than or equal to the number I'm thinking of.

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Let us say I am thinking of the number 19. If Friend A guesses 21they shed because 21>19. If Friend B supposes 16 and Friend C guesses 12, then they have both theoretically arrived at workable 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 happen frequently, but in the end of the day there can only be one winning answer. When multiple simultaneous answers are presented that are equivalent to or less than the target number, the Bitcoin network will decide by a simple majority--51%--which miner to honour. Typically, it is the miner who has done the work, i.e.

The losing block then becomes an"orphan block" .

Now imagine I present the"figure what number I'm thinking of" question, but I'm not asking just three friends, and I am not thinking of a number between 1 and 100. Rather, I am asking millions of would-be miners and I'm thinking of 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 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 middle of numbers, let us unpack the term"hexadecimal."

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