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When the receiver has determined the distance to four satellites, it is able to calculate it’s three-dimension position of latitude, longitude and elevation by the principle of trilateration. When the GPS receiver determines the distance to one satellite, it “knows” that it must be located on the surface of a sphere with the satellite at it’s center and the distance as the radius.

When it determines the distance to another satellite, it’s possible locations are narrowed down as it can only be located at the points where the spheres intersect. When three distances are known along with their corresponding spheres, only two points of intersection are possible – and one is far out in space and can be discarded. The other point of intersection is the location of the GPS receiver, which has now achieved a 2D position fix! To achieve a 3D position fix, four visible satellites are required.

GPS has a wide range of uses. GPS receivers are useful for hikers and outdoor enthusiasts. Aircraft and boats use GPS as navigation aids. New cars often come equipped with a GPS-based navigation system to assist motorists in unfamiliar areas. GPS can even be a game - GeoCaching is a worldwide 'treasure hunt' in which people set up small 'caches' and then post the coordinates of the cache to a central website. Other people then download the coordinates to their GPS receiver and try to find the cache and the 'treasure' inside. Cellular phones of the future will incorporate GPS receivers so that emergency services can accurately locate the owner in case of an emergency.
 

GPS positioning is affected by several variables that can lower its accuracy. These include Ionospheric/tropospheric delays, multipath distortion, ephemeris errors and timing errors.

Ionospheric and Tropospheric Delays
As the signal from the satellite passes through the atmosphere, it slows down. Most GPS receivers attempt to compensate for this with a built-in model, but it is only partially possible without other correction methods (more later in this piece).
Multipath Distortion
Before the signal reaches the receiver, it might have been reflected off tall buildings, rock faces and otherwise distorted.
Ephemeris Errors
Occasionally GPS satellites report an incorrect position.
Timing Errors
The quartz clocks used in the GPS receivers are not as accurate as the atomic clocks used onboard the GPS satellites. Small errors can be introduced this way

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