The terms used in crypto-currencies like mining are confusing for pretty much everyone. Also one irony I have found is, most of the people with computer science background and mathematics background are quite "afraid" of cryptography as such because of the Mathematical theories involved. I did my college final year project in Cryptography and I use cryptography on a day to day as a part of my work -- but beyond the basic understanding, I am even afraid to explore further. So the rally around the word "crypto" is quite a mania in itself even keeping aside the economics out of it.

I have a simple example which I often use to explain crypto-currency to people. Its not accurate or anything, but gives some basic understanding.

So what is mining ?

(A bitcoin mining rig : Photo details: Some rights reserved by Nathan11466)

As kids, many a times we were rewarded with gifts to pass exams or learn multiplication tables or a poem. Lets take this as the example.

Mining is a puzzle solving game which is played in real time across the globe. Every player is given the same puzzle to begin with and same information. Everyone tries to find the answer. The person who finds the answer first wins the first round and a new puzzle, related to the first puzzle is given to everyone.

Lets consider the basic example:

Try to list down all the prime numbers below 50.

so it is, 2, 3, 5, 7, 11, 13, 17 .....

most people reach at this point and slow down 19, 23 ... they are often confused.

This is when I tell them to stop and ask why are they slowing down for such a small puzzle. Now imagine you have to find all the prime numbers between 6 million +673 and 8 million + 87

The answer mostly is, "its going to take a lot of time."

(The Sieve of Eratosthenes is a simple algorithm for finding all prime numbers up to a specified integer. It was created in the 3rd century BC by Eratosthenes, an ancient Greek mathematician.)

This is exactly what is going on with mining.

Thousands of people are trying to find the answer for question within say 10 minutes and whomsoever finds it first get the price!

Also on a higher level, crypto-mining is related to operations with prime numbers. Though there are many complicated algorithms involves which is beyond the scope of this post - and myself!

what if someone fakes the answer ?

ha, thats possible, but then there is a verification process which other miners do. For any "answer" to be "verified" as correct, we need others to "confirm" the answer. So in the case of Bitcoin, we need a minimum of 6 people to confirm that the answer is correct.

Since everyone has the same data, verification is possible.

what happens to tens and thousands of people who didn't get the answer ?

Winner Takes it All.

In the proof of work models like bitcoin, the winner keeps the reward. This is a down side of the model and cryto currenies like CUREcoin has tried to bring SETI ( Search of Extra Terrestrial Intelligence) like concept to mining. CURECoin uses medical research related calculations.

what is the use of these answers and solving puzzles ?

A friend asked me, so people are crazy and trying to solve the puzzles. What does this answers signify beyond the perceived "economical value" ?

The Answer is nothing.

If the coin is not something like CUREcoin, the answer means nothing and its practically useless.

Why don't we do something useful then ?

Yes - there are many models which does exactly that.

Proof of Stake, PoS model is one where we share our resources like internet (OrchidProtocol), disk space (FileCoin), MaidSafe etc

STEEM blockchain based on Graphene is one model which is based on Delegated-Proof-of-Stake.

They have much lower power and environment impact and has utility value beyond the currency value.

Special thanks to @steemflow to make me write this.

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