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23May

What is Bitcoin Mining?

May 23, 2021 Wael El Ghazzawi Education 31

We aim to explain bitcoin mining to a non technical person

It’s a good idea to explain the blockchain technology first. then, continue with the mining process.

1. You have one single block (a block is like a page of an account book). This is where people can send money to each other and those transactions will be recorded for ever and ever on that page in a way that is unchangeable.

2. These pages are linked together in a chain of pages (like links of a necklace). That is the blockchain.

3. Miners are like people who check if all transactions do make sense and they record those transactions on these blocks for ever and ever. So no one can go back and change them by making new blocks.

4. The miners are rewarded for this job with a little bit of money after solving a difficult math problem. That is why we call it mining: like gold miners who find gold or oil miners who find oil, bitcoin miners find bitcoins (or fractions of them called Satoshis).

5. But they can only mine bitcoins on a very specific schedule: every 10 minutes 12.5 new blocks will be mined (or created) and with that number of pages added to the blockchain. There is no other way of adding new pages or getting more bitcoins on the system, so they are very valuable.

6. If you want to rent one of those miners for mining your own bitcoins you also have to pay them.

7. The miners can choose which transactions they want to add on a page depending of many criteria like: what’s the fee that people paid for making that transaction.

8. This is why it’s so slow and expensive to send Bitcoin (BTC) from one wallet to another. You will have to pay a fee to the miners for them adding your transaction on one of these pages. They only do it if there is a reward for them: some BTC (or Satoshis).

9. So in the end all transactions are grouped by miners choosing according to this method or that method (depending always on the fee that was paid), and then they are added on those pages in a way that can’t be changed anymore.

10. You can also choose which of these miners you want to include your transaction or no. So it’s very cool because you have some power as well compared with banks where they pick all transactions but you don’t have any power.

11. And also every bitcoin has a history so you can trace them like in an account book, from where they came, to who owns them now, etc.

That’s it! That is the blockchain and mining explained to a non-technical person. easier than i thought?

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02Apr

Blockchain and Smart Contracts

April 2, 2021 Wael El Ghazzawi Education 33

Blockchain is a tamper-proof distributed database that enables permanent, transparent and secure storage of all kinds of transactions. It records data across a network in real time, without central ownership or control. Blockchain allows information to be shared amongst a community and creates an immutable record that cannot be changed. Information held on blockchain exists as shared and replicated ledger, visible to anyone with access privileges who also can verify the authenticity of the information. Once entered into the database it cannot be altered or removed.

What are smart contracts?

A smart contract is used to exchange money, property, shares, or anything else of value in a transparent way without involving a middleman — legal standard conditions are embedded within the contract itself rather than being provided by a third party. Due to the nature of Blockchain, smart contracts actually run on a computer that is distributed across the Internet thus removing any single point of failure.

The “Contract” can be coded to handle unlimited numbers of users, automatically executes transactions and provides an audit trail. These smart contracts are stored and replicated in all nodes participating in the network making them transparent to anyone with access privileges. The technology allows individuals and businesses to use blockchain technology for automatic processing of payments –not just currencies but also stocks or other assets– when certain conditions are met

What is Ethereum?

Ethereum (ETH) is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference. In essence Ethereum is a platform that helps to run smart contracts and DApps (Decentralized Applications).

The project started in 2014 with the goal of building upon Bitcoin’s only weakness: its lack of Turing completeness; being unable to run programs developed for other languages. That means there cannot be any complex code on Bitcoin’s main-net blockchain –a restriction which makes many use cases unfeasible.

Smart Contract example on Ethereum:

A simple user story for Smart Contracts could be : Bob wants to sell his car and wishes to receive payment instantly, he could put a “For Sale” sign in the window of his car with a QR code that contains all the information for potential buyers to check (vehicle make, model, year of manufacture etc.) and then automatically receive payments to his bank account when agreed conditions are met. The “Smart Contract” is running on a blockchain network which prevents fraud or any other interruptions to the process from occurring.

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