How Bitcoins Are Made - An Overview

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Let's say you had one legit $20 and one really good photocopy of that same $20. If someone were to try to spend both the true bill and the fake one, someone who took the problem of looking at either of those bills' serial numbers would see that they were exactly the exact same number, and thus one of them had to be false.

This isn't a perfect 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 established by Satoshi Nakamoto, and is an issue of controversy, as some miners think the block size should be increased to accommodate more data.

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

1MB of transactions can theoretically be as little 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 must be the first miner to reach the perfect answer to some numeric problem. This process is also known as a proof of work.

The good news: No advanced math or computation is involved. You may have discovered 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 equivalent to the 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 , you need he has a good point to have a higher"hash speed," 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 could mine with your mining rig's hash pace, the website Cryptocompare provides a very 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 way to cobble together mining operations.  special info The photo below is a makeshift, high-tech mining machine.  The cards are those rectangular blocks with whirring circles.  Note the sandwich twist-ties holding the pictures cards into the metal rod.

Example: I tell three friends that I'm thinking of 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 any number that is less than or equal to the number I'm thinking of.

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Let's say I'm thinking of the number 19. If Friend A guesses 21, they shed because 21>19. If Friend B guesses 16 and Friend C supposes 12, then they've both discover this theoretically arrived at viable answers, because 16<19 and 12<19. There's no"extra credit" for Friend B, even though B's answer was nearer to the target 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 equivalent to or less than the target number, the Bitcoin network will decide by a simple majority--51%--which miner to honour. Normally, it is 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 I pose the"figure what number I am thinking of" question, but 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 would-be miners and I'm thinking about a 64-digit hexadecimal number. Now you see that it's going to be extremely 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 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's unpack the word"hexadecimal."

As you knowwe 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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