# An Unbiased View of How Bitcoins Are Made

Let us say you had one legit $20 and one quite good photocopy of the same $20. If someone were to attempt to spend both the true bill and the imitation one, someone that took the trouble of looking at both of the invoices' serial numbers would see that they were exactly the same number, and thus one of them needed to be fictitious.

That 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 entitled 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 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 eligible to earn Bitcoin--not everyone who verifies transactions will receive paid out.

1MB of transactions can theoretically be as small as 1 transaction (although 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 work, one is a matter of luck.

2) You must be the first miner to reach the right answer to some numeric problem. This practice is also known as an evidence of work.

The fantastic news: No advanced math or computation is involved. You might have discovered that miners are solving difficult 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 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 first. To mine , you need to have a high"hash rate," 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 how much Bitcoin you could mine with your mining rig's hash pace, the website Cryptocompare offers a very helpful important link calculator.

Either 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 cheap method to cobble together mining operations. The photograph below is a makeshift, high-tech mining machine. The graphics cards are such rectangular cubes with whirring circles. Note the sandwich twist-ties holding the graphics cards into the metal pole.

ExampleI tell three friends I'm thinking about 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 have to guess the specific number, they simply must be the first person to figure 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 guesses 16 and Friend C guesses 12, then they've both technically came at viable answers, since 16<19 and 12<19. There is no"extra credit" for Friend B, even though B's answer was nearer to the goal answer of 19. .

In Bitcoin terms, simultaneous answers occur frequently, but at 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%--that miner to honour. Normally, it's the miner that has done the work, i.e.

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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 know, we use the"decimal" system, which means it is base 10. This in turn means that each and every digit has 10 possibilities, 0-9.

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