What is Bitcoin and Bitcoin Mining? Bitcoin explained in dummy language
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I found myself this past weekend attempting to explain a Blockchain and Bitcoin Mining to family members who had never heard of any of bitcoin mining for dummies. I spent some time attempting to put together a simple explanation that makes sense, and I want to include it in an article to help other people understand. I would like your opinions on where I can improve this explanation, where I can make it more simple, and where I have it wrong. I don't want to get that in depth here. I may write a more advanced follow-up if needed.
To understand what happens behind the scenes with Bitcoin, you have to be familiar with the terms Blockchain and Mining. Here is an explanation of the Blockchain that makes the most sense to me. Can you imagine a system where anyone can see your paycheck deposited into your account, and then see where you send your money?
For privacy reasons, no bank would ever make this information public, or let anyone know exactly what it is doing with bitcoin mining for dummies money it takes in. In contrast, what if you could make a new anonymous account with the push of a button, and instantly make an anonymous transaction from that account? This would mean all creative auditing, fraud, data manipulation, currency creation from thin air, and other financial mischief would go out the window.
Once a transaction happened, it could not be altered by anyone because all computers worldwide have access to the information and would know immediately if something changed.
This is what happens every 10 minutes on the Bitcoin mining for dummies. All computers on the network have access to the new block and agree the block is correct.
Bitcoin mining for dummies chain of 10 minute blocks goes all the way back to the beginning of Bitcoin, and continues to grow. Now that bitcoin mining for dummies understand the Blockchain, you might be wondering how the anonymous transactions all get combined into the 10 minute blocks.
Mining is a term used for the process of assembling the new Blocks, and rewarding the computers putting them together the quickest with new Bitcoin.
Every computer mining on the network is frantically putting together all of the transactions from the last 10 minutes into a correctly formatted file. All of these computers are running at incredible speeds, but only one is going to finish first and add the new block to the end of the Blockchain. The winning computer is currently rewarded with This is called Mining. Other Altcoins use the same method for processing their transactions.
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