When someone hears about “bitcoin mining,” he or she usually pictures coins being dug out from the soil of the earth. But cryptocurrencies are not physical so why is it called “mining?”
Because it’s similar to gold mining in that the bitcoins exist in the protocol’s design (just as the gold exists underground), but they haven’t been brought out into the light yet (just as the gold hasn’t yet been dug up). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point. What “miners” do is bring them out into the light, a few at a time.
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To begin, let’s speak about the history of the blockchain. Before being in cryptocurrency, it had simple beginnings as an ideology in computer science — specifically, in the areas of data structures and cryptography.
There are three key features associated with Blockchain Technology:
- Blockchains maintain a record of all exchange information- this organized file is known as “ledger” in crypto world, and each exchange of information is refer to as a “transaction”. Each user transaction is compiled into the ledger as a “block”.
- It uses a distributed system to confirm every exchange through a Peer-to-Peer network of nodes.
- When the…
