ELI5 – Bitcoin mining explained

Bitcoin is pretty technical, and understanding it isn’t easy. Understanding how the Internet works isn’t easy either, but we can all surf from page to page without any problem.

Bitcoin is no different, you don’t really need to know all the intricacies, but for a basic understanding, let me ELI5 Bitcoin for you. Or check or info-graphic here.

ELI5 Bitcoin

Let’s just say there’s you and I in a room, and I hand you a dollar. I gave the dollar to you, and now you have it and I don’t. We didn’t need anybody else to verify the transaction, and I can’t take it back unless you give me it back. That dollar is yours now to do whatever you like with it.

But let’s say we have a digital dollar and we want to do the same transaction. I send you the digital dollar and you receive it. You have it, as it’s in your inbox, and you’re a dollar richer, just like the physical way.

But how do you know that dollar is one of a kind? The physical one, as long as it looks like a dollar it will pass for a dollar, but how do you know the digital one isn’t copied? I could have paid all my dollar debts with the same digital dollar for all you know.

This is the double spend problem that has gone on since digital money was first thought of. Many people tried and failed to get around it, but now with Bitcoin, Satoshi Nakamoto became the first person to figure it out.

Open Ledger

And it’s really quite a simple concept. It’s called an open ledger. All the digital dollars (in this case Bitcoin) that I send can be recorded on this open ledger.

Well, Satoshi got around this problem too. Instead of a central authority like a central bank keeping track of the ledger, Satoshi introduced a decentralized ledger. One which hundreds of thousands of computers have a complete record of. Read More at Bitcoin Maximalist

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