Hello everyone. Daniel here.
Cryptocurrencies such as bitcoins are becoming more and more popular.
But every time you look into it,
you find terms such as mining, blockchain, transactions
confirmation, hashing, digital signatures, private key, hard forks,
addresses, BIP39, nemonic phrases
What do all those stuffs mean?
And how are they related to each other?
let me explain
Ok so to explain everything,
we are going to use an analogy of operating a restaurant.
as you know,
All restaurants have managers to make sure things are running smoothly right?
Well, how do we create a restaurant
that doesnât need mangers to overlook everything?
letâs find out
First, we will need some cooks.
These people have invested a lot of money
to buy big ovens and using a lot of electricity to run them.
in the crypto-world, we call these people miners,
and instead of cooking up food, they are cooking up blocks.
For more explanation on how they do that,
see my video about mining.
For now, just understand that they are responsible
for making the block or âfoodâ in our analogy.
next, our restaurant needs to have some customers
so that the food will be eaten and the business can run!
Some customers will want pork and some will want chicken.
You can think of these people as users
and some will prefer to use bitcoin while others prefer to use ethereum.
Regardless, understand that these end users â useâ or âtradeâ the blocks
which in our analogy is eating the food
Now that we have people who demand the product,
we need a way to exchange those products with each other
and with other things we own.
This would be the cashier in our restaurant.