I have lived in
India long enough to have heard~ “network nahi aa raha” way too many times.
Have you ever wondered what that network actually is? This sentence is wrong
and is a classic case of catachresis. The appropriate thing would be “radio waves
nahi aa raha hai, how will I connect to the ‘network’”, but honestly why
bother. *sad noises*
So, what
exactly is network?
A network is
simply just 2 or more computers connected together. It could be a physical
connection of thousands of computers via hubs like LAN, WAN etc. or connected
wirelessly like your smart TVs and speakers with Wi-Fi. Internet is the connection of
million such computers globally. The purpose of a network is to send and
receive data.
Therefore, a network is just a collection of
computers connected together, be it by a wireless medium (wi-fi) or physical
cables.
Why does
anything have value?
Barter system
still exists, except the transactions are not direct commodity to commodity but
rather with an intermediate entity or token we so fondly call money. Money and gold have value because we give it value. They are the accepted mediums of exchange. Why are shirts worn by
celebrities so dearly-won? Because people GIVE it value.
Pokémon cards
are just kids tOyS right. RIGHT
A ‘1st edition shadowless Charizard’ card
sold for $360,000.
Money is just paper without us investing in
it, working for it, and the fact that it isn’t something that usually people
get so easily.
Ok so what is
cryptocurrency?
Cryptocurrency
is digital ‘money’. They are stored in a digital wallet online or on the
computer hardware. The key feature is that there is no middle man who transfers
the money, but the transfer is direct because the computers are connected in
network (^). In a traditional system, for example if I were to send money
to my friend, I would have to engage a middle man like a financial institution.
They would deduct my money, add the amount to receiver’s account, update the
ledger and take a small fee for their work.
In using cryptocurrency however, I am completely
removing the need for a middle man.
How to get cryptocurrency?
Buy the ones already in circulation.
One of the most popular and heard of is bitcoin. OR
"Mine” them, which means to bring new ones into
circulation. It is analogous to mining gold
What is mining?
Let’s take the example of bitcoin.
Mining is
the process of bringing new bitcoins into circulation. It’s the new gold rush
except no one is actually digging anything. Now the system of bitcoin is untraceable
and no one really knows when and where the money (bitcoin or any other cryptocurrency) is
being transferred. Miners don’t “find” the bitcoin, they are paid or rewarded
for the work they do.
Round 1. Validating Transactions:
As
I said earlier bitcoins are not traceable, so a problem of ‘double spending’
arises, which basically means copying the money (real paper money for example)
and spending it twice, but no one notices unless someone starts checking the
serial numbers on the notes. The same thing can happen with bitcoins as they
can be copied and spent twice.
This is
where miners come in. They audit 1 MB of transactions for legitimacy. Once they
complete verifying this block of transactions, they are rendered ELIGIBLE to be
rewarded with bitcoins.
Round 2. The Game:........
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