What is Bitcoin mining? To understand this, you first need to understand how the "blockchain" works.
A blockchain is data stored in a chain of many computers around the world. (These computers are technically called "nodes," but we'll just call them computers here.)
The important thing here is
① As the name "blockchain" suggests, data is stored in a linked "chain."
② "Data is stored in many computers around the world."
There are two main points to note:
① Blockchain that stores all data from the past to the present in a linked manner
First, let's look at what kind of information or data is stored on the blockchain. For example,
"0.001 BTC of Bitcoin was transferred from Wallet X to Wallet Y." ("BTC" is a Bitcoin trading unit, like "yen" or "dollar")
I created a new Bitcoin wallet.
The information is as follows.
The process for making a cash transaction is as follows:
(i) Prepare your wallet.
(ii) Keeping money in a wallet.
(iii) Pay with money from your wallet.
It will be.
In the case of Bitcoin,
(i) Create a wallet.
(ii) store the Bitcoin electronically in that wallet;
(iii) Sending Bitcoin to someone else's wallet.
That's the process. Bitcoin is exactly the same as cash. The difference is that all transactions are made as electronic data on a computer.
The Bitcoin blockchain stores all of the records related to these Bitcoin transactions.
Bitcoin was created in January 2009 and is still being traded as you read this.
So how is that transaction data stored?
What we need to think about here is where the yen, dollars, and other money in your hands came from. Needless to say, in the case of coins, they are made at the Japanese Mint, passed on to various people from banks, and then into your hands. Money is said to be a "thing that goes around in the world," and as such, it is said that money is created and then passed around in a circular manner.
Mint Bureau → ○☓ Bank → AB Co., Ltd. → Mr. A → You
That's how it came into your hands.
You can probably see why it would be strange if the coin in your hand wasn't created out of thin air, but was part of a chain that traveled from the mint to you.
Bitcoin is recorded in a chain-like manner, from when it is created to the current transaction (the most recent transaction) as it moves from one wallet to another. Blockchain is a system that collects and stores all of this transaction data in a single electronic "block," and links the data together in a chain.
Approximately every 10 minutes, a new block containing new transactions is added to the Bitcoin blockchain, which records all past transactions.
The blocks are linked together like a chain, making it truly a "blockchain."
You can see the current state of the Bitcoin blockchain on Mempool.space . At the time of writing this article, the 859,433rd block (the purple block on the left in the diagram below) is the block in which transactions have been confirmed and connected to the chain.
A block where a transaction has been started but not yet confirmed is marked yellow.
Once the transaction details of the yellow block on the far left are confirmed, it moves to the right of the dotted line, is assigned a block number, and becomes a blue block whose transaction details have been confirmed.
② Bitcoin transaction data is stored in many computers around the world.
So where is the Bitcoin blockchain data stored?
Now, let's imagine where the transaction data of the money in your hands is stored. Unfortunately, with coins and banknotes, the data is not stored, so we don't know who passed through which hands after the coin was made or the banknote was printed before it reached you.
What about savings in a bank? Money in a bank account is kept by the bank, and data on who you have transferred it to is stored. If you want to see data from the past, you can look at your transaction records or your deposit passbook via online banking. Banks store this transaction data carefully so that it is never lost. They store the computers in multiple locations with strict security measures so that the data can be retrieved even if it is stolen by a computer virus or destroyed in an earthquake. Some banks probably spend tens of billions of yen on storing this data.
You may think that it is safe because you are putting your money into it, but if the location of the computer where the bank stores the transaction data were to be leaked and the computer were to be hijacked, your deposit data could be lost. Although it is unlikely, there is also the possibility that terrorists could destroy the computer, or that a major earthquake could hit various places in Japan and destroy all the computers that happen to store data.
In the case of Bitcoin, the blockchain data, which contains all past transactions, is stored on computers around the world. Computers around the world store the exact same transaction data. As of September 2024, there are 19,544 computers (only accessible nodes, source: Bitnodes ).
When we say computer, we don't mean a large computer like the ones used by banks; it can be a small one like your personal computer.
With just 100,000 yen, you can set up a computer to store Bitcoin data.
This means that the number of computers storing blockchain data can be easily increased.
Which is safer: the computers that store Bitcoin transaction data, which are scattered all over the world, or a bank computer located in Japan, where the data may be stored in multiple locations?
The difference between the computers of banks and Bitcoin is actually similar to the mechanism of the Internet that we all use. The Internet was originally devised by the US government's Department of Defense to ensure that communications would not be cut off even if the Department of Defense, which collects information on the US military and defense, was attacked by nuclear weapons.
Before the invention of the Internet, the United States also centralized and stored data using large-scale computers, just like banks. After the Internet was created, a communication network that could withstand a nuclear attack was created using a computer network that was spread across the entire United States like a net. That technology was then made available to the public, and it became the Internet that you use today.
Bitcoin also uses the Internet to connect computers around the world, and constantly updated blockchain transaction data is sent to and stored in many computers around the world. Would it be an exaggeration to say that Bitcoin is money that can withstand a nuclear attack?