How Bitcoin Works: An Anonymous Collaborative Network
In its most essential form, Bitcoin is a ledger where all monetary transactions are kept. Whenever anyone sends currency via bitcoin, the master ledger where accounts are tallied are debited and credited the amount sent for each person. To keep it safe, this ledger is distributed among a network of computers all around the world, who constantly monitor and track bitcoin ledgers for discrepancies.
Bitcoin works on the principles of transparency and decentralization. By distributing the ledger among a network of anonymous computers, no one person is in control of the ledger, and no one person can change the ledger without the rest of the network noticing. When a discrepancy arises (can have a multitude of causes not solely malicious) the network flexes its muscles and shows why it is a necessary to keep the ledger safe. With the transaction in question, all the computers that are in agreement with each other are given the same math problem to solve. The math problem is designed so that it takes time to solve, and the only way to solve it quickly is for computers to collaborate. Therefore the group that solves the problem first is the largest group, and by that principle the most likely to be accurate. All ledgers are then updated to that group’s data. The winning team is given a reward in exchange for the power and infrastructure it used while solving the problem.
It is only via a huge collaborative network that bitcoin is able to function. The anonymity and decentralization of the ledger provide transparency and security that allow a seemingly “shady” currency to have legitimacy and merit. Bitcoin could not function without the novel use of a network of computers, that is beneficial to both the individual computer and the entire currency itself. Note: This is a simplified version of how this service works. In reality it is much more complicated, but it follows these ideas at its most fundamental leve.l
https://www.youtube.com/watch?v=C3OTJ1AdraY
https://www.nytimes.com/2015/11/05/business/bitcoin-basics.html