How Bitcoins Are Made for Dummies

All about Bitcoin Mining Code


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 who took the problem of looking at both of those invoices' serial numbers would observe that they were exactly the same number, and consequently one of them needed to be false.

This isn't a perfect analogy--we will explain in more detail below. .

Once a miner has confirmed 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 should 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 supports transactions will receive paid out.

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

In order to earn Bitcoin, you need to meet two conditions. One is a matter of effort, one is a matter of luck.

2) You have to be the first miner to reach the perfect answer to some numeric problem. This practice is also known as a proof of work.

The good 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 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: Since it is guesswork, you need a good deal of computing power in order to get there . To mine , you need to have a higher"hash rate," that is measured 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 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 low-cost method to cobble together mining operations.  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 graphics cards into the metal rod.

Case in point : I tell three friends 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 have to guess the exact number, they simply must be the very 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 shed because 21>19. If Friend B guesses 16 and Friend C supposes 12, then they've both theoretically arrived 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 target 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 equal to or less than the target number, the Bitcoin network will decide by a simple majority--51 percent --that miner to honour. Typically, it is the original source 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 present the"guess what number I am thinking of" question, but I'm not asking only three friends, and I am not thinking of a number between 1 and 100. Rather, I am asking millions of prospective miners and I'm thinking about a 64-digit hexadecimal number. Now you see that it's going to be quite hard to guess the ideal answer.

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The number above has 64 digits. Easy enough to understand so far. As you probably noticed, that number consists not just 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 term"hexadecimal."

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

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