Some Known Details 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 attempt to spend both the real bill and the imitation one, someone who took the trouble of looking at both of the bills' serial numbers would observe that they were the exact same number, and thus one of them needed to be false.

This isn't a great analogy--we'll 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 can be an issue of controversy, as some miners think 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 eligible to earn Bitcoin--not everyone who supports transactions will get paid out.

1MB of transactions can theoretically be as little as 1 transaction (though this is not at all common) or a few thousand. It depends on how much information 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 must be the first miner to arrive at the right answer to some 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 is not true in any way. 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 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 first. To mine successfully, you need to have a higher"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 just how much Bitcoin you can mine 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 into the tens of thousands.  Some miners--particularly Ethereum miners--buy individual graphics cards (GPUs) as a cheap method to cobble together mining operations.  The photograph below is a makeshift, high-tech mining machine.  The cards are such rectangular blocks with whirring circles.  Note the sandwich twist-ties holding the graphics cards into the metal pole.

Example: I tell three friends I'm thinking about a number between 1 and 100, and that I write that number on a piece of paper and seal it in an envelope. My friends don't have to guess the specific number, they simply must be the first person to figure any number that's less than or equal to this number I am thinking of.

 

 

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Let us say I'm thinking about 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 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 goal answer of 19. .

In Bitcoin conditions, simultaneous answers occur frequently, but at 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%--that miner to honour. Normally, it's the miner who 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 that I pose the"figure what number I am thinking of" question, however I'm not asking only 3 friends, and I'm 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 quite hard navigate to these guys to guess the ideal answer.

 

 

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The number preceding 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 this 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 know, we utilize the"decimal" system, which means it's base 10. This in turn means that each and every digit has 10 possibilities, 0-9.

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