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BITCOIN, BLOCKCHAIN AND MINING -Explained

In today’s world, it is imperative to understand the concepts of Bitcoin and its related terms. In this article, we will explain Bitcoin, Blockchain, and Mining to provide a basic understanding of these important concepts. Each concept will be presented with a story to make it easier to comprehend.

BITCOIN:

Bitcoin is a digital currency, often referred to as a cryptocurrency, that was created in 2009 by an unknown person or group of people using the pseudonym Satoshi Nakamoto. It operates on a decentralised network called blockchain, which is a distributed ledger technology.

Bitcoin exists purely in digital form and is not backed by any physical commodity like gold or government authority like traditional currencies (e.g., dollars or euros). It is entirely decentralised and operates independently of any central bank or government.

Bitcoin operates on a decentralised network of computers (nodes) that collectively validate and record transactions on the blockchain. This means no single entity or authority controls Bitcoin. Instead, transactions are verified by network participants through a consensus mechanism.

One of Bitcoin’s defining features is its limited supply. There will only ever be 21 million bitcoins in existence, making it a deflationary currency. This scarcity is built into the protocol, with a predetermined issuance schedule that gradually reduces the rate at which new bitcoins are created.

Explained in a Story :

Once upon a time, there was a magical kingdom called “The Land of Bitcoinia”, where people wanted to trade and buy things without using traditional coins or banks. To solve this problem, they invented something called Bitcoin.

Bitcoin was like a special type of gold coin, but it existed only in the digital world. People in “The Land of Bitcoinia” could use Bitcoin to buy goods or services online, just like using coins in the real world. The fascinating thing about Bitcoin was that it wasn’t controlled by any king or queen; instead, it was managed by everyone in the kingdom who participated in the Bitcoin network…………………to be Continued in Blockchain section.

BLOCKCHAIN:

The blockchain is a public ledger that records all Bitcoin transactions. It consists of blocks of data linked together in chronological order, forming a chain. Each block contains a set of transactions, and once added to the blockchain, transactions are irreversible and publicly visible.

Imagine a giant digital ledger or record book where every transaction made with Bitcoin is recorded. This ledger is called the blockchain. What makes blockchain special is that it’s decentralised and transparent. When someone makes a Bitcoin transaction, it’s added to the blockchain as a new block of information. The blockchain is maintained by a network of computers (called nodes) that work together to verify and record transactions. Once a transaction is recorded on the blockchain, it’s permanent and can’t be changed.

Explained in a Story :

Story continues………………To keep track of all the transactions made with Bitcoin, the people of the “The Land of Bitcoinia” created a magical book called the Blockchain. This book was unlike any other because it was not kept in one place but was copied and shared across the entire kingdom. Whenever someone made a transaction using Bitcoin, it was recorded in this book as a new page or block of information. Each block was linked to the previous one, forming a chain of transactions – hence the name “blockchain.” Everyone in the “The Land of Bitcoinia” could see the transactions in this book, making it transparent and trustworthy…………to be Continued in Mining section.

MINING :

Bitcoin transactions are processed and validated by miners, who use powerful computers to solve complex mathematical problems. This process secures the network and adds new blocks to the blockchain. Miners are rewarded with newly minted bitcoins for their efforts.

Mining is how new bitcoins are created and how transactions are verified on the Bitcoin network. Miners are like the bookkeepers of the Bitcoin blockchain. They use powerful computers to solve complex mathematical problems that validate and secure transactions. When a miner successfully solves a problem, they add a new block of transactions to the blockchain and are rewarded with new bitcoins as an incentive for their work. Mining also helps keep the Bitcoin network secure and trustworthy.

Explained in a Story :

Story continues………… Now, let’s meet the miners – the brave and hardworking individuals in “The Land of Bitcoinia”. They had special tools and machines to solve challenging puzzles. Whenever someone wanted to send Bitcoin to another person, the miners would verify the transaction by solving these puzzles. Once a puzzle was solved, the transaction was added to the blockchain as a new block. As a reward for their efforts, miners earned new bitcoins, just like finding treasure.

In this magical kingdom, Bitcoin, blockchain, and mining worked together to create a secure and decentralized system for trading and exchanging value. Everyone in “The Land of Bitcoinia” could participate and contribute to the success of this innovative digital currency, ensuring that transactions were reliable and transparent across the kingdom……………The end.