How does it work?

Lets take bitcoin for example. When a digital transaction is carried out, the blockchain stores the details (of every transactions) in a cryptographically protected block and sends out to the entire network. The same happens with the next transactions, forming a chain of transactions. The technology prevents the spending of the same transaction more than once. Using specialized software and increasingly powerful (and energy-intensive) hardware, miners (members in the network with high levels of computing power) convert these blocks into sequences of code, known as a „hash," which is a highly complex procedure, requiring serious computational and mathematical power. According to CNN Money, miners compete with each other to encode it by solving complex coded problems to verify transactions and add them to the blockchain. Simultaneously, bitcoins are created. The first miner to solve the problem and confirm the block receives a reward, in the bitcoin network, 12.5 bitcoins (equivalent to $100,000 in February 2018). Having said that, an interview (which you can listen to on this website) with a miner disclaims the competition and explains, that it is rather based on team work.

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