Bitcoin overview using the Feynman Technique
This post is one of a series of posts I am writing where I try to apply the Feynman Technique to a number of different crypto token projects. You can find the rest here. None of this should be taken as investment advice. They are just meant to be simple introductions to the projects.
Bitcoin is a computer to computer digital network of transactions. It does not require any single person or organization to approve each transaction. Instead, it leaves the approval of transactions up to everyone in the network.
The way it works is whenever a transaction is created, when one account wants to send another account some amount of Bitcoins, it gets broadcasted to all the computers on the network. This transaction is then combined with other transactions around the same time to form a block of transactions. Any computer on the network then has the chance to validate all the transactions in the block and figure out a computer puzzle.
Over time this puzzle gets more and more difficult with more computers trying to solve it at the same time. The difficulty of the puzzle is however hard it would have to be to take about 10 minutes for the entire network of computers to find an answer.
The first computer in the network to figure out the computer puzzle and have a block of all valid transactions, wins a certain amount of Bitcoins. That block then gets added to a list of all the other blocks that have been approved before it and sent out to every computer on the network. All computers then have the ability to keep track of all transactions that have occurred on the network up to that point.
The list of the entire history of transaction blocks is what makes Bitcoin secure. Since every computer in the network can know the history of transactions, every computer can know how many Bitcoins each account has and therefore can verify transactions and make sure no account uses more than they have or cheats the network in any other way.