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Crypto giveaway scams and how to spot them
By Thomas Hauer, Jr.
Cryptocurrency giveaway scams have been a problem for those involved in the crypto-community since the last major bull run in late 2020. Whether you’re a seasoned investor or just beginning to get your feet wet in the crypto-space, we encourage all of our customers to educate themselves on current cryptocurrency related scams and how to identify them. In this article, we’ll cover an increasingly common technique used by online scammers — the giveaway scam.
In a nutshell, giveaway scams are a form of social engineering in which a scammer attempts to deceive a cryptocurrency investor into believing that a major cryptocurrency exchange or celebrity is hosting a giveaway. The catch here is that in order to participate in the giveaway, you must first send a certain amount of cryptocurrency to a giveaway address so that you can verify your wallet address and receive your share of the giveaway. However, because cryptocurrency transactions are irreversible, once a victim sends money to the scammer’s address, there is nothing anyone can do to get it back and the scammer has made a profit.
Now that you understand the gist of what giveaway scams are all about, we’d like to make it extremely clear that Coinbase does not engage in cryptocurrency giveaways of any kind, however you can earn cryptocurrency by learning about them through Coinbase Earn. With that said, let’s move on to some recent trends.
Recent Giveaway Scam Trends
To help you recognize the signs of a giveaway scam, we’ve provided you with some examples of the most common giveaway scam trends being used to target cryptocurrency investors.
Coinbase Twitter Impersonations
In the screenshot below, we have a Twitter account impersonating Coinbase and replying to a legitimate Coinbase tweet with an image promoting a 5,000 BTC giveaway scam.
The link in this image directs to a web page which would ask you to verify your Bitcoin address by sending anywhere from 0.1 to 10 BTC to the scammer’s giveaway address. According to the scammer’s web page, you would get x10 your payment back. This all sounds very good, but it is 100% a scam and you will receive 0 BTC back!
Celebrity Twitter Impersonations
In this example, we have a very normal looking Twitter account replying to a tweet made by Senator Bernie Sanders. The response here is thanking Elon Musk and sharing an image that appears to be a tweet from Elon Musk about a Bitcoin and Ethereum giveaway being hosted by Tesla. In actuality, this image was manipulated to appear like Elon Musk made this tweet and is purely manufactured by a scammer.
Navigating to the link in the scammer’s image lands us on a web page that appears to be a Medium blog post. Within the post there are two “official” links leading to “free” Bitcoin and Ethereum. Both of these links lead to scam giveaway addresses that are not to be trusted no matter how great and well designed the web page looks.
Familiarize yourself with some of the most commonly observed bitcoin scams to help protect yourself and your finances.
Be wary of blackmail attempts in which strangers threaten you in exchange for bitcoin as a means of extortion. One common execution of this method is by email, where-in the sender transmits a message claiming that he/she has hacked into your computer and is operating it via remote desktop protocol (RDP). The sender says that a key logger has been installed and that your web cam was used to record you doing something you may not want others to know about. The sender provides two options – send bitcoin to suppress the material, or send nothing and see the content sent to your email contacts and spread across your social networks. Scammers use stolen email lists and other leaked user information to run this scheme across thousands of people en masse.
As bitcoin has become more popular, more people have sought to acquire it. Unfortunately, nefarious people have taken advantage of this and have been known to set up fake bitcoin exchanges. These fake exchanges may trick users by offering extremely competitive market prices that lull them into thinking they’re getting a steal, with quick and easy access to some cheap bitcoin. Be sure to use a reputable exchange when buying or selling bitcoin.
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Due to the viral nature of how information spreads across on the internet, scammers seek to take advantage of people by offering free giveaways of bitcoin or other digital currencies in exchange for sending a small amount to register, or by providing some personal information. When you see this on a website or social network, it’s best to immediately report the content as fraudulent, so that others don’t fall victim.
Unfortunately it’s very easy for con-artists to create social media accounts and impersonate people. Often times they lie in wait, until the person they’re trying to impersonate publishes content. The impersonator then replies to it with a follow-up message or call to action – like a free giveaway – using an account that looks almost identical to the original poster or author. This makes it seem like the original person is saying it. Alternatively, impersonators may also try to use these same fake accounts to trick others via private or direct message into taking some kind of action in an attempt to defraud or compromise. Never participate in free giveaways, and if you receive an odd request via someone in your network, it’s best to double check to confirm the authenticity via multiple mediums of communication.
Hackers have become very creative at finding ways to steal from people. When sending bitcoin, always be sure to double or triple check the address you’re sending to. Some malware programs, once installed, will change bitcoin addresses when they’re pasted from a user’s clipboard, so that all of the bitcoin unknowingly gets sent to the hacker’s address instead. Since there is little chance of reversing a bitcoin transaction once it’s confirmed by the network, noticing this after the fact means it’s too late and most likely can’t be recovered. It’s a good idea to be super-cautious about what programs you allow to have administrator access on your devices. An up-to-date, reputable virus scanner can also help but is not foolproof.
Meet in Person
When buying or selling bitcoin locally, a counterparty may ask you to meet in person to conduct the exchange. If it isn’t a trusted party that you already know, this is a very risky proposition that could result in you getting robbed or injured. Con-artists have also been known to exchange counterfeit fiat currency in exchange for bitcoin. Consider using a peer-to-peer platform to escrow the funds in place of meeting in person.
Money Transfer Fraud
Do not reply to emails or inbound communications from strangers telling you they need help moving some money, whereafter in exchange for your services, you’ll get a portion of the funds.
Beware of emails purported to be from services you use soliciting you for action, such as resetting your password, or clicking through to provide some sort of interaction with regard to your account. It can be very difficult to spot the difference in a fake email that’s trying to entice you to compromise your account, and a legitimate one sent on behalf of a product or service that you use. When in doubt, considering triple-checking the authenticity of the communication by forwarding it to the company, using the contact email address on their website, calling them on the telephone, and/or reaching out to them via their official social media accounts.
Phishing websites often go hand-in-hand with phishing emails. Phishing emails can link to a replica website designed to steal login credentials or prompt one to install malware. Do not install software or log in to a website unless you are 100% sure it isn’t a fake one. Phishing websites may also appear as sponsored results on search engines or in app marketplaces used by mobile devices. Be wary that you aren’t downloading a fake app or clicking a sponsored link to a fake website.
Do not participate in offerings where one or more people offer you a guaranteed return in exchange for an upfront deposit. This is known as a ponzi scheme, where-in future depositors’ principals are used to pay previous investors. The end result is usually a lot of people losing a lot of money.
Similarly to free giveaways, prize giveaway scams trick people into taking action or supplying information about themselves. For example, supplying a name, address, email and phone number in order to claim a prize. This can allow a hacker to attempt to use the information to gain access to accounts by impersonating you.
Pump and Dumps
Do not trust people who entice you or others to invest because they claim that they know what the bitcoin price is going to be. In a pump and dump scheme, a person (or persons) try to artificially drive up or pump the price so that they can dump their holdings for a profit.
A pyramid scheme promises returns to participants based on the number of people they invite to join. This enables the scheme to grow virally and rapidly, however, it most often doesn’t result in any kind of meaningful return for the members and/or those invited who also joined. Never invite your personal network under the sole goal of accumulating rewards or returns from a product or service, and do not contribute your own capital at the behest of others to accelerate the process.
This is a type of malware that partially or completely blocks access to a device unless you pay a ransom in bitcoin. It’s best to consult the advice of a trusted computer professional for removal assistance, rather than paying the ransom. Be careful about what programs you install on your devices, especially those that request administrator access. Also be sure to double-check that the application you are downloading isn’t a fake one that’s impersonating a legitimate one you’ve used in the past.
Be careful when investing in alternative coins (altcoins). Amongst altcoins there may be scam coins, enticing users to invest via private sales, or with presale discounts. Scam coins may feature a flashy website and/or boast a large community to create a fear of missing out effect on people who discover it. This helps early holders pump up the price so that they can dump and exit their positions for a profit. Scam coins without large communities may do airdrops – offering free coins (or tokens) to people in exchange for joining their communities. This enables scam coins to present their initiatives with inflated traction metrics to make investors feel like they’re missing out when it comes time for them to decide if they’d like to buy-in. Scam coins may also use the word Bitcoin in them in an effort to trick or mislead people into thinking there is a legitimate relationship.
Bitcoin Cloud Mining
Want to find the best Bitcoin cloud mining contracts? This post has you covered.
Most Bitcoin Cloud Mining Companies are Scams
Like the heading says, most cloud mining contracts are scams. Why?
Because it’s easy for companies to take peoples’ money, and then not pay out. A company can claim to be a cloud mining company without any proof of actually owning any hardware.
So remember: 99% of cloud mining companies are scams.
Mining is not the fastest way to buy bitcoins.
Which Companies Are Not Scams?
We can’t recommend any cloud mining companies at this time.
Note: If you do find one, you’ll need a wallet to receive payouts to. A secure hardware wallet like the Ledger Nano X is a good option.
Is Cloud Mining Profitable?
It depends what your goals are with cloud mining. If your goal is to obtain bitcoins, then there is really no reason to cloud mine or even mine at all.
You will get more bitcoins for your buck if you just buy bitcoins!
If you think mining is cool and want to try, then cloud mining still is not a good option. Grab a cheap USB miner and run it at home.
VPNs for Mining
As a Bitcoin miner, you may also want to look into getting a VPN.
You can never have enough security when it comes to bitcoin. Using a VPN adds an extra layer of security.
Bitcoin Cloud Mining Comparison
There is not much to compare, because we personally do not recommend buying any cloud mining contracts so we will not spend the time to compare the two companies above.
But check back in to see if we find any new, legit cloud mining companies.
Bitcoin Cloud Mining Scams History
The reason there are so many cloud mining scams is because it is very easy for anyone in the world to setup a website.
Once the website is setup it can claim that the company has a large mining facility.
The company can act legit by sending initial payments to its customers. But after that it can just keep the already received payments for hash power and then make no further payments.
In just the last few months, two cloud mining scams were uncovered: HashOcean and Bitcoin Cloud Services.
What Payment Methods do Cloud Mining Companies Accept?
Most cloud mining companies accept Bitcoin, PayPal, and credit cards. If a cloud mining company accepts bitcoins then there is a good chance it is a scam.
This is because Bitcoin payments cannot be reversed. Once the scam company receives your bitcoin payment you have no way to get your coins back.
Are there Free Cloud Mining Trials?
No company would give away free cloud mining; this is basically giving away free money.
Any company offering free trials, especially if they require payment information, is most likely a scam.
Mining or buying bitcoins? You can’t do either without a Bitcoin wallet.
Our guide on the best bitcoin wallets will help you pick one. Read it here!
How does Bitcoin Cloud Mining Work?
Cloud mining means a host company owns Bitcoin mining hardware and runs it at a warehouse.
You pay the company and rent out some of the hardware. Based on the amount of hash power you rent, you will earn a share of payments from the cloud mining company for any revenue generated by the hash power you purchased.
Cloud Mining Viruses
There have been viruses that land on computers and then use the computers’ power to mine bitcoins.
Run a malware detector on your computer if you think you may have come under attack.
Is Mining Software the Same as Cloud Mining?
Mining software is something you download on your computer. It is required when you OWN mining hardware. Software connects your hardware to the internet so that it can make hashes and communicate with the network.
Just buy Bitcoins!
If you just want bitcoins, don’t bother with cloud mining. Just find an exchange in your country and buy some bitcoins.
Best Bitcoin Mining Software
Best Bitcoin Mining Hardware
Best Bitcoin Mining Pools
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Beware of These Top 5 Bitcoin Scams
The value of bitcoins goes up, and then it comes back down. The press is all over the story. Pundits and market watchers all have their opinion and voice it loudly across the airwaves and the Internet.
Bitcoin has taken us all on quite a rollercoaster ride. Only time will tell whether this cryptocurrency, which has been controversial since its introduction in 2008, will continue booming or if the bubble will burst and prompt more people to short-sell Bitcoin.
One thing is certain: Bitcoin’s meteoric rise has attracted a lot of attention. People may not understand the technology or philosophy behind Bitcoin, but they do see stories of early adopters and savvy investors who turned a few thousand bucks into millions when Bitcoin’s value increased.
And they want to be one of them.
Unfortunately, that puts them in a position—along with veteran investors—to be victims of opportunistic con artists and hackers who perpetrate Bitcoin scams. One of the benefits of cryptocurrency is that it’s unregulated by the government and very private. But that also makes it ripe for fraud.
Let’s check out the top five Bitcoin scams you need to look out for:
Bitcoin Scam 1: Fake Bitcoin Exchanges
In 2020, South Korean financial authorities and the local Bitcoin community exposed one of the most insidious Bitcoin scams: a fake exchange called BitKRX. It presented itself as part of the largest trading platform in the country and took people’s money. To avoid this, you should stick with popular, well-known Bitcoin exchanges and Bitcoin forums so you get news of fakes quickly.
Bitcoin Scam 2: Ponzi Schemes
Bernie Madoff is perhaps the most well-known Ponzi schemer. He did it with mainstream investments. But the principle of a pyramid scheme, in which you take money from new investors to pay previous investors, can be applied to Bitcoin scams. MiningMax, one such scheme, brought in $200 million before 14 fraudsters were arrested. As you can imagine, the investors never got any returns on their Bitcoin investments.
Bitcoin Scam 3: Fake Cryptocurrencies
A common scam is to present a new cryptocurrency as an alternative to Bitcoin. The idea is that it’s too late to cash in on Bitcoin and that you need to invest in one of these up-and-coming cryptocurrencies. My Big Coin was shut down for this reason. The fraudsters behind My Big Coin took $6 million from customers to invest in the fake cryptocurrency and then redirected the funds into their personal bank accounts.
Bitcoin Scam 4: Old School Scams
If somebody emailed or called and said they were from the IRS and that you owed back taxes that had to be paid immediately, would you send them money? Many people do. Instead of having the victim wire money via Western Union or transfer funds to a bank account, con artists are contacting victims and demanding that victims transfer bitcoins. The best way to avoid this scam is to be skeptical of phone calls or emails that say they’re from a government agency. Legitimate authorities wouldn’t contact you that way, and they won’t ask for bitcoins.
Bitcoin Scam 5: Malware
Malware has long been a way for hackers to get passwords needed to access computer networks or steal credit card and bank account numbers. Now they’re using it to conduct another one of the most common Bitcoin scams. If your Bitcoin wallet is connected to the Internet, they can use malware to get access and drain your funds if you’re not protecting yourself from malware.
You can download malware by clicking links in your email. You can also download it from websites and social media. There might be a post, for example, where someone claims a certain program allows you to mine bitcoins for free. Download it, and you get malware.
When in Doubt, Verify
If you’re not sure of a website or email’s legitimacy, contact the company involved directly. If you can’t find the company’s contact information easily on social media or on its website, that’s a red flag.
Don’t Fall Victim to Bitcoin Scams
Bitcoin is a volatile enough investment as it is. Don’t increase your chances of losing money by falling prey to these Bitcoin scams. Stay alert for potential fraudsters and trust your instincts. If something seems too good to be true, it probably is.
How Does Bitcoin Mining Work?
What is Bitcoin Mining?
Cryptocurrency mining is painstaking, costly and only sporadically rewarding. Nonetheless, mining has a magnetic appeal for many investors interested in cryptocurrency because of the fact that miners are rewarded for their work with crypto tokens. This may be because entrepreneurial types see mining as pennies from heaven, like California gold prospectors in 1849. And if you are technologically inclined, why not do it?
However, before you invest the time and equipment, read this explainer to see whether mining is really for you. We will focus primarily on Bitcoin (throughout, we’ll use “Bitcoin” when referring to the network or the cryptocurrency as a concept, and “bitcoin” when we’re referring to a quantity of individual tokens).
The primary draw for many Bitcoin miners is the prospect of being rewarded with valuable bitcoin tokens. That said, you certainly don’t have to be a miner to own cryptocurrency tokens. You can also buy cryptocurrencies using fiat currency; you can trade it on an exchange like Bitstamp using another crypto (as an example, using Ethereum or NEO to buy bitcoin); you even can earn it by playing video games or by publishing blog posts on platforms that pay users in cryptocurrency. An example of the latter is Steemit, which is kind of like Medium except that users can reward bloggers by paying them in a proprietary cryptocurrency called STEEM. STEEM can then be traded elsewhere for bitcoin.
The bitcoin reward that miners receive is an incentive which motivates people to assist in the primary purpose of mining: to support, legitimize and monitor the Bitcoin network and its blockchain. Because these responsibilities are spread among many users all over the world, bitcoin is said to be a “decentralized” cryptocurrency, or one that does not rely on a central bank or government to oversee its regulation.
- By mining, you can earn cryptocurrency without having to put down money for it.
- Bitcoin miners receive bitcoin as a reward for completing “blocks” of verified transactions which are added to the blockchain.
- Mining rewards are paid to the miner who discovers a solution to a complex hashing puzzle first, and the probability that a participant will be the one to discover the solution is related to the portion of the total mining power on the network.
- Double spending is a phenomenon in which a bitcoin user illicitly spends the same tokens twice.
- You need either a GPU (graphics processing unit) or an application-specific integrated circuit (ASIC) in order to set up a mining rig.
What Coin Miners Actually Do
Miners are getting paid for their work as auditors. They are doing the work of verifying previous bitcoin transactions. This convention is meant to keep Bitcoin users honest and was conceived by bitcoin’s founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the “double-spending problem.”
Double spending is a scenario in which a bitcoin owner illicitly spends the same bitcoin twice. With physical currency, this isn’t an issue: once you hand someone a $20 bill to buy a bottle of vodka, you no longer have it, so there’s no danger you could use that same $20 bill to buy lotto tickets next door. With digital currency, however, as the Investopedia dictionary explains, “there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original.”
Let’s say you had one legitimate $20 bill and one counterfeit of that same $20. If you were to try to spend both the real bill and the fake one, someone that took the trouble of looking at both of the bills’ serial numbers would see that they were the same number, and thus one of them had to be false. What a bitcoin miner does is analogous to that—they check transactions to make sure that users have not illegitimately tried to spend the same bitcoin twice. 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, known as a “block,” that miner is eligible to be rewarded with a quantity of bitcoin (more about the bitcoin reward below as well). The 1 MB limit was set by Satoshi Nakamoto, and is a matter of controversy, as some miners believe the block size should be increased to accommodate more data, which would effectively mean that the bitcoin network could process and verify transactions more quickly.
Note that verifying 1 MB worth of transactions makes a coin miner eligible to earn bitcoin—not everyone who verifies transactions will get paid out.
1MB of transactions can theoretically be as small as one transaction (though this is not at all common) or several thousand. It depends on how much data the transactions take up.
“So after all that work of verifying transactions, I might still not get any bitcoin for it?”
That is correct.
To earn bitcoins, you need to meet two conditions. One is a matter of effort; one is a matter of luck.
1) You have to verify
1MB worth of transactions. This is the easy part.
2) You have to be the first miner to arrive at the right answer to a numeric problem. This process is also known as proof of work.
“What do you mean, ‘the right answer to a numeric problem’?”
The good news: No advanced math or computation is involved. You may have heard that miners are solving difficult mathematical problems—that’s not exactly true. 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. It’s basically guesswork.
The bad news: It’s guesswork, but with the total number of possible guesses for each of these problems being on the order of trillions, it’s incredibly arduous work. In order to solve a problem first, miners need a lot of computing power. To mine successfully, you need to have a high “hash rate,” which is measured in terms of megahashes per second (MH/s), gigahashes per second (GH/s), and terahashes per second (TH/s).
That is a great many hashes.
If you want to estimate how much bitcoin you could mine with your mining rig’s hash rate, the site Cryptocompare offers a helpful calculator.
Mining and Bitcoin Circulation
In addition to lining the pockets of miners and supporting the bitcoin ecosystem, mining serves another vital purpose: It is the only way to release new cryptocurrency into circulation. In other words, miners are basically “minting” currency. For example, as of Nov. 2020, there were around 18 million bitcoins in circulation. Aside from the coins minted via the genesis block (the very first block, which was created by founder Satoshi Nakamoto), every single one of those bitcoin came into being because of miners. In the absence of miners, Bitcoin as a network would still exist and be usable, but there would never be any additional bitcoin. There will eventually come a time when bitcoin mining ends; per the Bitcoin Protocol, the total number of bitcoins will be capped at 21 million. However, because the rate of bitcoin “mined” is reduced over time, the final bitcoin won’t be circulated until around the year 2140.
Aside from the short-term bitcoin payoff, being a coin miner can give you “voting” power when changes are proposed in the Bitcoin network protocol. In other words, a successful miner has an influence on the decision-making process on such matters as forking.
How Much a Miner Earns
The rewards for bitcoin mining are halved every four years or so. When bitcoin was first mined in 2009, mining one block would earn you 50 BTC. In 2020, this was halved to 25 BTC. By 2020, this was halved again to the current level of 12.5 BTC. In about 2020, the reward size will be halved again to 6.25 BTC. As of the time of writing, the reward for completing a block is 12.5 Bitcoin. In November of 2020, the price of Bitcoin was about $9,300 per bitcoin, which means you’d earn $116,250 (12.5 x 9,300) for completing a block. Not a bad incentive to solve that complex hash problem detailed above, it might seem.
If you want to keep track of precisely when these halvings will occur, you can consult the Bitcoin Clock, which updates this information in real time. Interestingly, the market price of bitcoin has, throughout its history, tended to correspond closely to the marginal cost of mining a bitcoin.
If you are interested in seeing how many blocks have been mined thus far, there are several sites, including Blockchain.info, that will give you that information in real time.
Equipment Needed to Mine
Although early on in bitcoin’s history individuals may have been able to compete for blocks with a regular at-home computer, this is no longer the case. The reason for this is that the difficulty of mining bitcoin changes over time. In order to ensure smooth functioning of the blockchain and its ability to process and verify transaction, the Bitcoin network aims to have one block produced every 10 minutes or so. However, if there are one million mining rigs competing to solve the hash problem, they’ll likely reach a solution faster than a scenario in which 10 mining rigs are working on the same problem. For that reason, Bitcoin is designed to evaluate and adjust the difficulty of mining every 2,016 blocks, or roughly every two weeks. When there is more computing power collectively working to mine for bitcoin, the difficulty level of mining increases in order to keep block production at a stable rate. Less computing power means the difficulty level decreases. To get a sense of just how much computing power is involved, when Bitcoin launched in 2009 the initial difficulty level was one. As of Nov. 2020, it is more than 13 trillion.
All of this is to say that, in order to mine competitively, miners must now invest in powerful computer equipment like a GPU (graphics processing unit) or, more realistically, an application-specific integrated circuit (ASIC). These can run from $500 to the tens of thousands. Some miners—particularly Ethereum miners—buy individual graphics cards (GPUs) as a low-cost way to cobble together mining operations. The photo below is a makeshift, home-made mining machine. The graphics cards are those rectangular blocks with whirring circles. Note the sandwich twist-ties holding the graphics cards to the metal pole. This is probably not the most efficient way to mine, and as you can guess, many miners are in it as much for the fun and challenge as for the money.
The “Explain It Like I’m Five” Version
The ins and outs of bitcoin mining can be difficult to understand as is. Consider this illustrative example for how the hash problem works: I tell three friends that I’m thinking of a number between one and 100, and I write that number on a piece of paper and seal it in an envelope. My friends don’t have to guess the exact number; they just have to be the first person to guess any number that is less than or equal to the number I am thinking of. And there is no limit to how many guesses they get.
Let’s say I’m thinking of the number 19. If Friend A guesses 21, they lose because of 21>19. If Friend B guesses 16 and Friend C guesses 12, then they’ve both theoretically arrived at viable answers, because of 16 What Is a “64-Digit Hexadecimal Number”?
Well, here is an example of such a number:
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?
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 every digit of a multi-digit number has 10 possibilities, zero through nine.
“Hexadecimal,” on the other hand, means base 16, as “hex” is derived from the Greek word for six and “deca” is derived from the Greek word for 10. In a hexadecimal system, each digit has 16 possibilities. But our numeric system only offers 10 ways of representing numbers (zero through nine). That’s why you have to stick letters in, specifically letters a, b, c, d, e and f.
If you are mining bitcoin, you do not need to calculate the total value of that 64-digit number (the hash). I repeat: You do not need to calculate the total value of a hash.
So, what do “64-digit hexadecimal numbers” have to do with bitcoin mining?
Remember that ELI5 analogy, where I wrote the number 19 on a piece of paper and put it in a sealed envelope?
In bitcoin mining terms, that metaphorical undisclosed number in the envelope is called the target hash.
What miners are doing with those huge computers and dozens of cooling fans is guessing at the target hash. Miners make these guesses by randomly generating as many “nonces” as possible, as fast as possible. A nonce is short for “number only used once,” and the nonce is the key to generating these 64-bit hexadecimal numbers I keep talking about. In Bitcoin mining, a nonce is 32 bits in size—much smaller than the hash, which is 256 bits. The first miner whose nonce generates a hash that is less than or equal to the target hash is awarded credit for completing that block and is awarded the spoils of 12.5 BTC.
In theory, you could achieve the same goal by rolling a 16-sided die 64 times to arrive at random numbers, but why on earth would you want to do that?
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