Before we talk about Block chain. Let's make one thing clear. We have two terms to clearly understand.
Bit Coin (or any other crypto currency): This is a digital money.
Block Chain: Block chain is a technology that helps moving digital money from moving one place to another.
Purely because of the way money is handled today. If you consider banks as an example, there's hardly any transparency. Let's take an example of a person names chandu wants to transfer his money from US to his friend nithya in India. Today the only way that chandu can perform his transaction to reach to nithya's account is only through some 3rd party. The way that it works is chandu first sends his money to the 3rd party, and then the 3rd party debits its fee from the transaction, identifies nithya through some means and transfer the remaining amount.
The problem with above process is chandu is losing some money as a means of fee and nithya is waiting tirelessly for the amount to arrive into her account. If for some reason there happens an issue while the transfer is in progress then chandu has to go on forever in discussions with the 3rd party.
Now, block chain helps resolve these kind of issues. It will remove the middleman, and faster than any other technology can do. So let's dive into the Block chain concepts.
Let's say we have a network of 3 folks who want to move money from one to another. Let's say those 3 characters are elon, mark and baros and say elon wants to transfer $1000 to mark out of his available $1010. Now this particular transaction will be added to a transaction ledger. Now, if mark wants to transfer $500 to baros.
This amount of $500 will again be added to that transaction ledger. Open Ledger thus is nothing but a chain of open transactions which is open and available to public. Everyone is now able to see this ledger and assert if a certain transaction is valid or not. Let's say if Elon wants to transfer $20 to baros which he cannot, because he has initially transferred $1000 and how available balance is only $10 and elon cannot tamper this as everyone in the network would be having a copy of this open ledger which contains information about how much elon had initially and after certain transactions how much he's still holding. Don't no one would actually know elon by his name in this case, but with an alpha-numeric lengthy string.
As discussed in the first point, the open ledger is not centralized but will be decentralized and everyone in the network holds a copy of the open ledger.
Thus, we do not need to have any centralized trusted party. But how can we make sure all these ledger copies are in sync and accurate. Let's get this sorted through our 3rd important point in Block chain.
Miners are special nodes that can hold these ledgers. Miners are going to compete among themselves to take a certain transaction, validate it and append it to the ledger.
The miner who does this first will get some award in terms of coins like Bitcoin, Etherium etc., There's a lot to this miners but let's stop it here to keep this simple.
