How Bitcoins Are Made - Questions

Let us say you had one legit $20 and one really good photocopy of the same $20. If someone were to try to spend both the true bill and the imitation one, someone that took the problem of looking at either of the invoices' serial numbers would observe that they were the 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 verified 1 MB (megabyte) worth of Bitcoin transactions, they are eligible to win the 12.5 BTC. The 1 MB limit was established by Satoshi Nakamoto, and is a matter of controversy, as some miners believe the block size ought to be increased to accommodate more information.

Note that I stated that verifying 1 MB value 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 at all common) or several thousand. It depends on how much data 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 arrive at the perfect answer to a numeric problem. This process is also known as a proof of work.

The fantastic news: No advanced math or computation is involved. You might have discovered that miners are solving challenging 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 target hash.

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The bad news: Since it's guesswork, you need a lot of computing power in order to get there . To mine successfully, you need to have a higher"hash speed," 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 just how much Bitcoin you could mine along with your mining rig's hash rate, 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 into the tens of thousands.  Some miners--particularly Ethereum miners--purchase individual graphics cards (GPUs) as a cheap method to cobble together mining operations.  The photo below is a makeshift, home-made mining machine.  The cards are such rectangular cubes with whirring circles.  Note the sandwich twist-ties holding the pictures cards to the metal pole.

Case in point : I tell three friends that I'm thinking of 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 specific number, they simply must be the first person to guess any number that is less than or equal to the 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 guesses 12, then they've both technically came at workable answers, since 16<19 and 12<19. There's no"extra credit" for Friend B, even though B's answer was nearer to the goal answer of 19. .

In Bitcoin conditions, simultaneous answers happen frequently, but at 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 majority--51%--that 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"guess what number I'm thinking of" question, however I'm the original source 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'm thinking of a 64-digit hexadecimal number. Now you see that it's going to be quite hard to guess the right answer.

All About Help Wikipedia

The number above has 64 digits. Easy enough to understand up to now. As you likely noticed, that number consists not only 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 us unpack the word"hexadecimal."

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