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A GPS unit is the primary tool for geocachers so it's important to have a really good understanding of how the system works, the limitations and things to consider when using them. A good working knowledge of the system will help you to understand how to geocache properly.
The GPS system is one of the great inventions of the 20th century. It has revolutionized navigation and many applications have been developed that make use of this system.
The system that we use for geocaching is called GNSS, or Global Navigation Satellite System. It was set up and is operated by the US Air Force and costs billions of dollars. We get to use it for free!
Basically GNSS is based on about 24 satellites that orbit the earth and transmit a radio signal towards the ground. The signals from the satellites are all synchronized to incredible accuracy by a ground-based atomic clock.
The GPS unit that you hold in your hand is basically a radio receiver (not a transmitter!) that is able to calculate the time differences from the signals that it receives from the various satellites that it can "see" in the sky above where you are standing.
Remember that these signals are travelling at the speed of light, so the time differences from the various satellites are minuscule. Even so, your GPS can detect these differences and triangulate where you are down to about 3 metres at best. The optimal place to get the most accurate fix is when you can see clear sky all around, such as on the top of a hill, or out on the water. The signal is degraded if you are, for example, under trees, in a canyon, in amongst tall buildings or anywhere you don't have a clear view of the sky.
Garmin Oregon - a popular geocaching GPS
The GPS receiver is a marvel of modern technology. To give you an idea of its sensitivity, it is equivalent to trying to see a 100 watt light bulb located 10,988 nautical miles out in space!
So what does this mean for you?
It means that next time you're trying to find a geocache be aware of the limitations in the accuracy of position. The best accuracy your unit can achieve in the most optimal conditions is about 3 metres (~10ft). So your search radius is about 3 metres from where your GPS says is GZ - and that's assuming that the cache owner has published accurate co-ordinates. If you are under trees, in a canyon or some other difficult location, your search radius may be wider.
It also means that when you are placing a cache don't just hide the container, mark the location and leave. That's a recipe for inaccurate co-ordinates. Spend the the time to average the position (a good GPS has this function) to get accurate co-ordinates - especially if it's in a location where the signal is not so good. Your fellow geocachers will have loving thoughts towards you if your co-ords are accurate.
This is a really important subject when you learning how to geocache, so we'll go into more detail elsewhere.