Having Trouble Understanding How Bitcoin Mining Works? This Reverse Lottery Analogy Should Help
Understanding how Bitcoin works is essential.
More and more people are coming to buy Bitcoin since the end of 2020. This influx of new investors has caused the price of Bitcoin to jump from $10K to nearly $65K in April 2021, and $69K in November 2021. A crash in the price of Bitcoin has dropped its price just above $46K as I write this, but that will only be temporary.
Among new entrants, and even among those who have been buying Bitcoin for a while now, many have a vague idea of the algorithm at the heart of the Bitcoin protocol.
That algorithm is Proof-of-Work (PoW). Everyone has heard of it, but for most people, Bitcoin mining is equivalent to solving a complex mathematical puzzle. This is how PoW has been presented to the general public since forever.
I have already explained in a theoretical way how Proof-of-Work works using the power of cryptographic hash functions. Following feedback from several readers, I realize that it is not always easy for non-technical people to integrate all this.
In this article, I will explain the Proof-of-Work by taking an analogy that should help you to understand things better.
Let’s use the reverse lottery analogy to explain Bitcoin mining
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