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I have several doubts about cryptocurrency when I started(bitcoin) reading about it. I google it around and it only added to more confusion.

  1. I am not able to understand the difference between a bitcoin transaction block and a bitcoin as a coin. Aren't bitcoin currency also a bitcoin transaction block in case of a newly minted bitcoin?

  2. Bitcoins are mined after solving cryptographic puzzles, but in the initial days did the author(s) had to create lot of unnecessary transaction to solve the puzzles to create new coins until the general public picked it up? (Or how did they create currencies without any transactions in initial days)

I hope the questions are clear. Do let me know if it needs more editing/clarifications.

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I am not able to understand the difference between a bitcoin transaction block and a bitcoin as a coin.

Transactions are coins?

There is no difference. This is because there is no distinct data entity that is a bitcoin. The nearest thing to a coin is a part of a transaction record where a recipient's amount (an output amount) is recorded which has not subsequently been spent by appearing as an input in a later transaction. These unspent transaction outputs (UTXOs) are arguably the nearest thing to a coin.

Miners melt coins?

The idea of coins arises because of an analogy with fiat cash. You can regard part of the miner's job as effectively melting down the input coins and recasting the molten metal into some new output coins each with a different face-value. The total weight of metal remains the same.

If you want to spend money you don't give anyone coins, you just spread a rumour out that you'd like certain coins to be melted down and specify what size coins you'd like to be cast from the melt. For each new coin, you specify a new poem to be inscribed. You prove you are the author of the poems melted.

Coins don't exist!

Analogies are not real, they are just stories to try to help us understand something by referring to something different which we already know about. In the case of Bitcoin these analogies and most of the terms are really deeply misleading at times. Wallets never contain money. Keys don't open locks. Addresses don't identify places (or people). The blockchain is not a ledger. So don't get hung up about what a coin is. A coin is just a character in a fairy story. It isn't real. It is a starting point for understanding, but it won't take you far. After a very short while you will need to avoid thinking about coins, if you want to better understand what is happening.


in the initial days did the author(s) had to create lot of unnecessary transaction

All transactions are unnecessary!

(... for mining to occur, apart from the miner's own)

Blocks added to the bitcoin blockchain don't have to contain any transactions other than the so-called coinbase transaction where the miner creates a permitted amount of new money out of nothing. That is a transaction with no inputs, only an output. Such blocks are still created from time to time. However miners are financially rewarded for including other people's transactions in their blocks, so this is relatively rare.

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  • It's good that you busted some myths, but I feel you should have explained the "reality" :/ Commented May 10, 2022 at 6:39
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    @DakshGargas: The reality is very complex and hard to explain, especially in the space available for one answer on this Q&A site. Whole books have been written on the subject. I suspect most of us approach the reality through necessary layers of analogies, each of which we can discard as we approach the next. I'm tempted to try to explain the reality as I currently see it, but it will take some careful thought. Commented May 10, 2022 at 12:41
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  1. I am not able to understand the difference between a bitcoin transaction block and a bitcoin as a coin. Aren't bitcoin currency also a bitcoin transaction block in case of a newly minted bitcoin?

A bitcoin block contains the most recent transactions, i.e. Person A sends Person B 10 bitcoins. It works like an old fashioned record book, where all the transactions are written out.

The first record in a next block is a transaction that awards the winning miner (who completed the previous block) the newly minted bitcoins.

  1. Bitcoins are mined after solving cryptographic puzzles, but in the initial days did the author(s) had to create lot of unnecessary transaction to solve the puzzles to create new coins until the general public picked it up (Or how did they create currencies without any transactions in initial days)?

The initial block does not contain any transactions, it only contains the reward to the miner of this block. The first block is also called the Genesis block.

Watch this video ("But how does bitcoin actually work?" from 3Blue1Brown), it explains it really well with more details.

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