Beyond the Bitcoin Hype (A simple non-technical introduction to Blockchain - Part 2 )

in #bitcoin2 years ago

This post is the long overdue follow up to the PART 1 of "Beyond the Bitcoin Hype (A simple non-technical introduction to Blockchain )".

There will be a few technical terms involved but rest assured that all explanations are easy to understand.

Bitcoin protocol components

A mempool is the networks storage where all transaction is being held before going into the block.

Think of it as a warehouse that hosts all the inventories of goods and products.

A local block is where the miners stores the transaction gathered from the mempool in pursue of adding it to the next chain.

Think of this one as the trucks that temporarily store goods as it delivers the product to its respective destination.

Let’s assume that the entire Bitcoin protocol is represented by the network of 6 miners below.
Each miner has a copy of the updated mempool and blockchain.

Bitcoin protocol network

The miners will pick a transaction from the mempool and store it in their local block. The intent is to place their local block next to the main blockchain.

To better understand this process, let’s try to zoom into one of the miner’s work.

Each transaction has its equivalent transaction ID (please see sample block #50001) which will be stored in the mempool together with all the unconfirmed transaction in the network all around the world.

The miners' duty is to pick some of this transaction and place it in their local block.

Mining in a basic sense are computers, or nowadays mining rigs, solving complex cryptographic problems in a process known as the proof-of-work (POW). This problem is so difficult that despite having millions of computers competing to solve this problem, it still takes 10 mins in average to get a miner finds the correct solution. The winning miner gets the privilege of putting its local block next to the official chain getting a reward of a newly mined bitcoin. If you look at the example block of block #50001 transaction 1 is a record of the miners' reward that is 50BTC. Enough reason to keep the rigs up and running all night, don't you think?

Shown below is a good representation of the newly mined block (originated from the winning miners local block) being added (chained) to the official block chain.

In this diagram this symbol “ ” signifies mining . Take note that, as explained earlier, all miners has transaction stored in their local blocks. They are in the race of getting the solution first driven by the BTC reward and some transaction fees.

Bitcoin protocol network (Mining)

Let’s say Miner A is the first one to solve the cryptographic problem. It will first broadcast to the system its wining block. Then all the loosing miners will drop all their work and put all the transaction in their local block back to the mempool, this is to give way to updating their copy of the blockchain placing the block from the wining miner secured in the official chain.

Once the network comes into consensus the process of getting a transaction from the mempool and mining will start over again with a new math problem. This is a self-auditing system and each node participates in invalidating the transaction.

Bitcoin protocol is just one of blockchains application, several protocols are also available in the market like Etherium that has an ether coin, Ripple which give XRP coin, etc.

I believe blockchain is an important technology that will play a key role in the future of our economy that’s why I encourage you to pay attention to one of this generations greatest invention. Learn more by subscribing to my blog: johnslens.com

Sort:  

Congratulations @jrdeomampo! You have completed the following achievement on the Steem blockchain and have been rewarded with new badge(s) :

Award for the number of comments

Click here to view your Board of Honor
If you no longer want to receive notifications, reply to this comment with the word STOP

Do not miss the last post from @steemitboard:

SteemitBoard Ranking update - Resteem and Resteemed added

Support SteemitBoard's project! Vote for its witness and get one more award!

Congratulations @jrdeomampo! You have completed the following achievement on the Steem blockchain and have been rewarded with new badge(s) :

You got more than 10 replies. Your next target is to reach 50 replies.

Click here to view your Board of Honor
If you no longer want to receive notifications, reply to this comment with the word STOP

Do not miss the last post from @steemitboard:

SteemitBoard notifications improved

Support SteemitBoard's project! Vote for its witness and get one more award!