Imagine for a second that you are in charge of the task of inventing money
But you get this task today, not in the 12th century when money was initially invented
You're basically asked to find a way for people to exchange an agreed value between one another I
Know it's hard but try to think look this was done today. Huh would we really be using metal coins and paper for this
Perhaps we can find a better way
What if we wrote down somewhere maybe in an electronic ledger? What value each person has?
This way we can keep track of how much value each person can spend
So if I for example do some work for you, you would probably give me some of your value in exchange
Let's name this value Bitcoin
But how will people be defined in this ledger?
I mean how will someone send me value or bitcoins?
I guess we will have to give each person a unique identifier, or address
We will keep track of which address or person holds which value
These addresses are known as wallets
So we've decided to write down in our ledger which address or wallet holds which amount of value
This ledger is called on the blockchain, and it keeps all of the transactions from the beginning of time
Now it's time to make sure that everyone follows the rules
How can we do this?
How can we ensure that no one cheats and says that their address has more value than what they actually own?
I know! We'll spread this ledger around to tens of thousands of people
So whenever someone wants to transfer some of his value in order to get something
we can check to see if his story adds up to what everyone else think.
He's good for his value. We will let him spend it.
But why would these people want to carry this ledger on their computer?
and who has time to verify all of this each time a transaction is made
Well, what if we rewarded people who did this with value?
Hence the miners were born
Tens of thousands of people who get paid in bitcoins for going through the ledger
Making sure that everything is order and that no one is cheating
including themselves
You've just invented a modern solution for money, and that's exactly what bitcoin is.
A digital decentralized currency.
For more information visit 99Bitcoins.com, a non-technical blog about Bitcoin and cryptocurrency