Part One: Vocab.

Block Chain

The blockchain is a public record of Bitcoin transactions in chronological order. The blockchain is shared between all Bitcoin users. It is used to verify the permanence of Bitcoin transactions and to prevent double spending.

Blockchain

A block is a record in the blockchain that contains and confirms many waiting transactions. Roughly every 10 minutes, on average, a new block including transactions is appended to the blockchain through mining.

Cryptography

Cryptography is the branch of mathematics that lets us create mathematical proofs that provide high levels of security. Online commerce and banking already use cryptography. In the case of Bitcoin, cryptography is used to make it impossible for anybody to spend funds from another user's wallet or to corrupt the blockchain. It can also be used to encrypt a wallet so that it cannot be used without a password.

Double Spend

If a malicious user tries to spend their bitcoins to two different recipients at the same time, this is double spending. Bitcoin mining and the blockchain are there to create a consensus on the network about which of the two transactions will confirm and be considered valid.

Mining

Bitcoin mining is the process of making computer hardware do mathematical calculations for the Bitcoin network to confirm transactions and increase security. As a reward for their services, Bitcoin miners can collect transaction fees for the transactions they confirm, along with newly created bitcoins. Mining is a specialized and competitive market where the rewards are divided up according to how much calculation is done. Not all Bitcoin users do Bitcoin mining, and it is not an easy way to make money.

Stay tuned for a more in-depth dive as I consult on one of the largest mining projects in the country!