Blockchain Basics

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There are so many explanations on blockchains out there and the only one that made really sense to me was: https://anders.com/blockchain/

Watch the video, play with the examples and suddenly everything will make sense.

Great resource! Thanks for sharing

Great explanation.

Although I'm more curious about the mining process and how public/private keys are used.

Mining is just finding a combination of values that the hash of them will have a number of zeros in it. (intentionally brute force problem)

Public key crypto is used to confirm that the coins can move from one account to another, or to be more precise from one output to another input. (there are no accounts in Bitcoin, that's just an illusion)

And how is it possible for newly mined blocks to be worth less bitcoins that earlier blocks? I'm talking about the limited quantity of bitcoins. How is that achieved?

The amount that the miner can claim is hardcoded in the client, something like "if block no < X you can create out of thin air only N coins". After some time N will be zero and the incentive for the miner will come purely from fees.

Of course a miner could just use a different, bigger value but then the block would not be accepted by anyone else and be basically worthless.

The rules are there because everyone is using the same client or bug to bug compatible alternative.

That was extremely helpful - thanks a lot!

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