# How Bitcoins Are Made - The Facts

Let us say you had one legit $20 and one quite good photocopy of the same $20. If someone were to try to spend both the real bill and the fake one, someone that took the problem of looking at either of the invoices' serial numbers would observe that they had been the exact same number, and consequently one of them needed to be false.

This isn't a perfect analogy--we'll 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 can be an issue of controversy, as some miners think the block size should be increased to accommodate more information.

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

1MB of transactions can technically be little as 1 transaction (though this is not in any way common) or a few thousand. It depends on how much information the transactions consume.

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 challenging mathematical problems--that's not true at all. What they are actually doing is trying to be the first miner to come up with a 64-digit hexadecimal number (a"hash") which is less than or equivalent to the hash.

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The bad news: Because it is guesswork, you need a good deal of computing power in order to get there . To mine successfully, you need to get 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 how much Bitcoin you can mine with your mining rig's hash pace, the site Cryptocompare offers 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 low-cost way to cobble together mining operations. The photograph below is a makeshift, home-made mining machine. The Bonuses graphics cards are such rectangular blocks with whirring circles. Note the sandwich twist-ties holding the pictures cards to the metal rod.

ExampleI tell three friends I'm thinking of 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 need to guess the exact number, they simply must be the very first person to guess any number that's less than or equal to the number I'm thinking of.

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Let's say I am thinking about the number 19. If Friend A guesses 21they lose because 21>19. If Friend B guesses 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 closer to the goal answer of 19. .

In Bitcoin terms, simultaneous answers happen 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 determine by a simple majority--51%--that miner to honour. Typically, it's the miner who has done the most 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 only 3 friends, and I'm not thinking of a number between 1 and 100. Rather, I'm asking millions of prospective miners and I am thinking of a 64-digit hexadecimal number. Now you see that it is going to be quite hard to guess the right answer.

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The number preceding has 64 digits. Easy enough to understand so far. As you likely noticed, that number consists not just of look at this site numbers, but also letters of this alphabet. Why is that

In order to understand these letters are doing in the center of numbers, let's unpack the word"hexadecimal."

As you knowwe utilize the"decimal" system, which means it is base 10. This in turn means that every digit has 10 chances, 0-9.