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Bitcoin as a digital currency is the most popular type of cryptocurrency that runs on the decentralized blockchain. Bitcoin is majorly a cryptocurrency (that eliminates the third party) aiding peer-to-peer transactions. Bitcoin is the decentralized alternative to banking systems. The banks have a person, employed to record transactions such as debit and credit whereas the blockchain throws the opportunity open to everyone. Anyone who wants to participate in updating the ledger just needs to solve the puzzle.

A miner is a person that uses their computers (nodes) to solve difficult mathematical puzzles, in return is rewarded with bitcoin and not just that but is allowed to create a block in the blockchain.

A ledger is a book that records or gives an account of credit and debit transactions.

To verify transactions on the blockchain means to record transactions on a ledger, therefore, adding them to a block.

In the banking system, there is someone who is in charge of recording the credit and debit transactions that take place in the bank. This is similar to the blockchain but where the difference comes in, is in the individual. The blockchain does not have a particular person who records and updates its “record book”(blockchain ledger). The blockchain ledger is open to anyone to update the transactions (whether borrowing, lending, buying or selling, and so on) provided the person solves a very hard mathematical puzzle (sincerely speaking the puzzle is very difficult). The first miner to solve it submits it to the system so that others can verify the correctness of the answer. If the answer is wrong, the miners keep solving and trying until a correct answer is got. The reward for solving the puzzle is that the blockchain gives that miner the privilege of updating the ledger in the blockchain and not just that, the miner is also rewarded with bitcoin.

Why the mathematical puzzle?

This is because of the decentralized nature of blockchain. No particular person is assigned the job of updating the ledger of transactions, unlike the conventional system where one is employed to record all transactions. Because of this, the blockchain throws the opportunity open. anyone who solves the hard puzzle gets the privilege of verifying transactions (including the transaction in a block or recording it, same thing) and updating the ledger.

The main purpose behind bitcoin mining is to update the ledger in a decentralized manner.

The major activities involved in bitcoin mining are first, the solving of puzzles, secondly, the verifying of transactions, and thirdly, the reward of bitcoin.