user10385: I will be explaining Bitcoin to a non-technical group and I am hoping somebody can provide me with a very basic visual analogy of the crypto-currency mining process.
My half-baked idea, was to somehow describe the mining process as partaking in a complex word search. Hopefully getting my group to visualize a large pool table sized word search (block) and have them imagining searching for a 30 alphanumeric character identifier (wallet). Describing the blockchain as a city sized word-search on top of 21 million pool tables?

Is this a good analogy to use, or is there a better/more applicable one?
Using (and adding to) the best analogy, how can I explain the difference in mining with CPU/GPU/ASIC and why the ASIC hardware is the quickest?


user10295: So I'm not entirely sure that this is what you're looking for, but your question specifically asked about the mining process, not exactly how to explain transactions or the blockchain...
So, mining is kind of like blending food.  If you blend some food, you get a unique output, which is some sort of mush.  It is very easy to make this mush, however it is very hard to take the mush and recreate the food you started with.  
If you take a pound of carrots and a pound of celery, and blend them you will get a certain type of mush.  If you again take a pound of carrots and a pound of celery, you will get the same type of mush.  
Mining is like trying to find a certain type of mush (or output).  You need to blend a lot of different things and get different types of mush, and once your mush matches what you're looking for, you have been successful.  
At this point you know the ingredients needed to make the mush and can reproduce it easily.  This means that others can reproduce what you did and prove that you did, in fact, find the solution.  
With bitcoin there are a lot of outputs which we are trying to find, and therefore we need to try an impressive amount of "ingredients" (input) to find all of the different solutions.  Once you find the ingredients for a solution, you have solved the problem and are rewarded with a certain amount of bitcoins.  

user9654: I like the analogy of solving a Rubik's Cube or a Sudoku puzzle. The clearest part (in my opinion) of that analogy is "hard to solve, trivial to verify".
For the second part of your question, using an ASIC could be like being able to work on hundreds or thousands of Rubik's Cubes (or Sudoku puzzles) all at the same time.

user3029: What is Bitcoin mining? (Short Version in Layman Terms)
Within the Bitcoin network, there is lottery held every 10 minutes. And in this lottery you have to submit guesses to the network, just like how you would buy a lottery ticket with a set of numbers. In a real lottery you might have 6 digits to guess, but in Bitcoin mining you can think of it as 1 million digits you have to guess. A human would not be able to guess this, so this is where a computer comes in and submits billions and trillions of guesses within these 10 minutes. Which every computer guesses correctly wins the Bitcoins. Currently the reward is 25 Bitcoins every 10 minutes. I left out 99% of the technical jargon that most Bitcoiners try to throw in when explaining this process.
What is Bitcoin mining? (Long Technical Version)
The fundamental basis to know before getting into mining is the fact that there will only ever be 21 million bitcoins that can be mined. They come into existence every 10 minutes at 25 Bitcoins at a time. Once all the Bitcoins are mined, the year will be 2140 (126 years from today). In addition, every 4 years the 25 Bitcoin reward is halved. So when we hit the year 2016, we will only be rewarded 12.5 Bitcoins every 10 minutes. And in the year 2020, it will be 6.25 and so forth. When we hit the year 2060, we will only be able to mine maybe only a fraction of a Bitcoin every 10 minutes. So you can imagine the ratio of the supply to the demand when that time comes.
Bitcoin Mining is modeled after physical gold mining. In the beginning it was easy to mine as all the gold (bitcoins) was readily seen above ground and anyone could pick it up off the ground. But as more people came to try to mine, all the low hanging fruit was taken. Now additional hardware was needed (ASIC Mining) as you had to dig deeper to find the gold (Bitcoins) and you needed more people to come help to dig deeper (called mining pools). 
Bitcoin Mining isn't just about wasting electricity and getting a reward for it. It actually serves a real purpose, which is to secure the entire Bitcoin network from fraud and hackers. When miners mine for Bitcoins every 10 minutes, they are actually processing transactions for the entire network. When user A sends user B an amount of Bitcoins, it gets processed by these miners. It's just that the 25 Bitcoin reward is the incentive to secure the network. Ingenious isn't it? 
I still left a bunch of jargon out, but it still isn't needed it to get the point across.  

user4139: First, tell them that mining is a very bad analogy and they should forget it.
I like to think of it like people buying Wonka bars in an attempt to find the Golden Ticket.  Everybody who works on securing the blockchain is trying to find some unknown number that, when combined with a number from the blockchain, achieves a desired result. The first person to find it, wins the rewards (transaction fees + new coins).
The more numbers you try, the better your chances of finding the special number before anyone else.  The protocol adjusts automatically: as more people work on finding the magic number, the harder it becomes to find.  
Few people "mine" by themselves these days.  People band together in pools to split up the work, and then share the rewards.  Instead of having a small chance to find a huge reward, you get a steady stream of bitcoins.

user5406: Imagine News City, where everyone is a newspaper editor competing to create the next day's newspaper. Only one newspaper editor's draft will make it into print, and its editor wins a fat check.
Over the course of the day there is a lot of events happening. Each newspaper editor will eventually gain knowledge of each event through word of mouth, but they hear about them in different orders and with different delays. Upon receiving news about an event, each newspaper editor will verify the event's validity, then discard bogus events and any events that were already previously published. If there is exceptionally many events, he might also need to select which ones are the most newsworthy and rewarding, as there are only so many pages available per issue, leaving the remaining events to be published the next day.
Because the news editors as a group would never be able to decide without envy whose news selection should be printed (since every one put at least one draft in), News City has hired a notary in Monte Carlo that randomly picks some words from a dictionary for each upcoming issue, of which one must be used somewhere in the draft in order for it to qualify. Every editor may turn in one draft at a time, but when it doesn't qualify, follow-up with another as often as he wants. They might be scrambling the selection of the articles or adding quotes from famous people to vary the used words, in order to win the prize.
The incorruptible notary will forward a winning draft to the printer immediately, and also publish the list of words that would have won. He is contracted to aim to have one issue per day. So, when he gets a lot of submissions, the issue might be a bit early, and he will pick fewer qualifying words for the next issue trying to keep the editors busy for a whole day before coming up with a new qualifying draft.
The events here are Bitcoin transactions, the newspaper editors the miners, the incorruptible notary is the Bitcoin protocol, "a day" the 10 minute block interval, and the word-picking scheme portraits the difficulty.

user15467: I wrote a blog post called Bitcoin by Analogy that captures the best analogy I've seen for explaining Bitcoin:
The nation of Yap in the South Pacific uses a unique form of money called Rai stones, which are circular disks carved out of limestone, with a hole in the middle, that can be up to 12 feet in diameter and weigh up to 8,800 lbs!

Trading stones of this size is difficult: no one wants to cart around a 4 ton stone every time they make a purchase. As a result, the Yapese came up with a clever solution: they decided to determine ownership by verbal agreement. Whenever there was a trade, the parties involved would communicate to the rest of the tribe the amount of stone that had been exchanged. The stones wouldn't actually move from one house to another, but the knowledge of who owned what was memorized and handed down through oral history.
It turns out that this model of money is an excellent analogy for Bitcoin: the ownership of money is determined through collective memory (similar to Bitcoin's global ledger, known as the block chain), money is exchanged by telling everyone in the village about transactions (much like sending out messages in Bitcoin for each transfer), and new money enters the system through the time consuming and randomized process of mining (Bitcoins are created through digital mining). 
It's a fairly long blog post, so I'm not sure it makes sense to copy it here; see Bitcoin by Analogy for the rest of the explanation.

10385: <p>I will be explaining Bitcoin to a non-technical group and I am hoping somebody can provide me with a very basic visual analogy of the crypto-currency mining process.</p>

<p>My half-baked idea, was to somehow describe the mining process as partaking in a complex word search. Hopefully getting my group to visualize a large pool table sized word search (block) and have them imagining searching for a 30 alphanumeric character identifier (wallet). Describing the blockchain as a city sized word-search on top of 21 million pool tables?</p>

<ul>
<li>Is this a good analogy to use, or is there a better/more applicable one?</li>
<li>Using (and adding to) the best analogy, how can I explain the difference in mining with CPU/GPU/ASIC and why the ASIC hardware is the quickest?</li>
</ul>
 10295: <p>So I'm not entirely sure that this is what you're looking for, but your question specifically asked about the mining process, not exactly how to explain transactions or the blockchain...</p>

<p>So, mining is kind of like blending food.  If you blend some food, you get a unique output, which is some sort of mush.  It is very easy to make this mush, however it is very hard to take the mush and recreate the food you started with.  </p>

<p>If you take a pound of carrots and a pound of celery, and blend them you will get a certain type of mush.  If you again take a pound of carrots and a pound of celery, you will get the same type of mush.  </p>

<p>Mining is like trying to find a certain type of mush (or output).  You need to blend a lot of different things and get different types of mush, and once your mush matches what you're looking for, you have been successful.  </p>

<p>At this point you know the ingredients needed to make the mush and can reproduce it easily.  This means that others can reproduce what you did and prove that you did, in fact, find the solution.  </p>

<p>With bitcoin there are a lot of outputs which we are trying to find, and therefore we need to try an impressive amount of "ingredients" (input) to find all of the different solutions.  Once you find the ingredients for a solution, you have solved the problem and are rewarded with a certain amount of bitcoins.  </p>
 9654: <p>I like the analogy of solving a Rubik's Cube or a Sudoku puzzle. The clearest part (in my opinion) of that analogy is "hard to solve, trivial to verify".</p>

<p>For the second part of your question, using an ASIC could be like being able to work on hundreds or thousands of Rubik's Cubes (or Sudoku puzzles) all at the same time.</p>
 3029: <p><strong>What is Bitcoin mining? (Short Version in Layman Terms)</strong></p>

<p>Within the Bitcoin network, there is lottery held every 10 minutes. And in this lottery you have to submit guesses to the network, just like how you would buy a lottery ticket with a set of numbers. In a real lottery you might have 6 digits to guess, but in Bitcoin mining you can think of it as 1 million digits you have to guess. A human would not be able to guess this, so this is where a computer comes in and submits billions and trillions of guesses within these 10 minutes. Which every computer guesses correctly wins the Bitcoins. Currently the reward is 25 Bitcoins every 10 minutes. I left out 99% of the technical jargon that most Bitcoiners try to throw in when explaining this process.</p>

<p><strong>What is Bitcoin mining? (Long Technical Version)</strong></p>

<p>The fundamental basis to know before getting into mining is the fact that there will only ever be 21 million bitcoins that can be mined. They come into existence every 10 minutes at 25 Bitcoins at a time. Once all the Bitcoins are mined, the year will be 2140 (126 years from today). In addition, every 4 years the 25 Bitcoin reward is halved. So when we hit the year 2016, we will only be rewarded 12.5 Bitcoins every 10 minutes. And in the year 2020, it will be 6.25 and so forth. When we hit the year 2060, we will only be able to mine maybe only a fraction of a Bitcoin every 10 minutes. So you can imagine the ratio of the supply to the demand when that time comes.</p>

<p>Bitcoin Mining is modeled after physical gold mining. In the beginning it was easy to mine as all the gold (bitcoins) was readily seen above ground and anyone could pick it up off the ground. But as more people came to try to mine, all the low hanging fruit was taken. Now additional hardware was needed (ASIC Mining) as you had to dig deeper to find the gold (Bitcoins) and you needed more people to come help to dig deeper (called mining pools). </p>

<p>Bitcoin Mining isn't just about wasting electricity and getting a reward for it. It actually serves a real purpose, which is to secure the entire Bitcoin network from fraud and hackers. When miners mine for Bitcoins every 10 minutes, they are actually processing transactions for the entire network. When user A sends user B an amount of Bitcoins, it gets processed by these miners. It's just that the 25 Bitcoin reward is the incentive to secure the network. Ingenious isn't it? </p>

<p>I still left a bunch of jargon out, but it still isn't needed it to get the point across.  </p>
 4139: <p>First, tell them that mining is a very bad analogy and they should forget it.</p>

<p>I like to think of it like people buying Wonka bars in an attempt to find the Golden Ticket.  Everybody who works on securing the blockchain is trying to find some unknown number that, when combined with a number from the blockchain, achieves a desired result. The first person to find it, wins the rewards (transaction fees + new coins).</p>

<p>The more numbers you try, the better your chances of finding the special number before anyone else.  The protocol adjusts automatically: as more people work on finding the magic number, the harder it becomes to find.  </p>

<p>Few people "mine" by themselves these days.  People band together in pools to split up the work, and then share the rewards.  Instead of having a small chance to find a huge reward, you get a steady stream of bitcoins.</p>
 5406: <p>Imagine News City, where everyone is a newspaper editor competing to create the next day's newspaper. Only one newspaper editor's draft will make it into print, and its editor wins a fat check.</p>

<p>Over the course of the day there is a lot of events happening. Each newspaper editor will eventually gain knowledge of each event through word of mouth, but they hear about them in different orders and with different delays. Upon receiving news about an event, each newspaper editor will verify the event's validity, then discard bogus events and any events that were already previously published. If there is exceptionally many events, he might also need to select which ones are the most newsworthy and rewarding, as there are only so many pages available per issue, leaving the remaining events to be published the next day.</p>

<p>Because the news editors as a group would never be able to decide without envy whose news selection should be printed (since every one put at least one draft in), News City has hired a notary in Monte Carlo that randomly picks some words from a dictionary for each upcoming issue, of which one must be used somewhere in the draft in order for it to qualify. Every editor may turn in one draft at a time, but when it doesn't qualify, follow-up with another as often as he wants. They might be scrambling the selection of the articles or adding quotes from famous people to vary the used words, in order to win the prize.</p>

<p>The incorruptible notary will forward a winning draft to the printer immediately, and also publish the list of words that would have won. He is contracted to aim to have one issue per day. So, when he gets a lot of submissions, the issue might be a bit early, and he will pick fewer qualifying words for the next issue trying to keep the editors busy for a whole day before coming up with a new qualifying draft.</p>

<p>The events here are Bitcoin transactions, the newspaper editors the miners, the incorruptible notary is the Bitcoin protocol, "a day" the 10 minute block interval, and the word-picking scheme portraits the difficulty.</p>
 15467: <p>I wrote a blog post called <a href="http://brikis98.blogspot.com/2014/04/bitcoin-by-analogy.html" rel="nofollow noreferrer">Bitcoin by Analogy</a> that captures the best analogy I've seen for explaining Bitcoin:</p>

<p>The nation of <a href="http://en.wikipedia.org/wiki/Yap" rel="nofollow noreferrer">Yap</a> in the South Pacific uses a unique form of money called <a href="http://en.wikipedia.org/wiki/Rai_stones" rel="nofollow noreferrer">Rai stones</a>, which are circular disks carved out of limestone, with a hole in the middle, that can be up to 12 feet in diameter and weigh up to 8,800 lbs!</p>

<p><img src="https://i.stack.imgur.com/oCxfX.jpg" alt="enter image description here"></p>

<p>Trading stones of this size is difficult: no one wants to cart around a 4 ton stone every time they make a purchase. As a result, the Yapese came up with a clever solution: they decided to determine ownership by verbal agreement. Whenever there was a trade, the parties involved would communicate to the rest of the tribe the amount of stone that had been exchanged. The stones wouldn't actually move from one house to another, but the knowledge of who owned what was memorized and handed down through oral history.</p>

<p>It turns out that this model of money is an excellent analogy for Bitcoin: the ownership of money is determined through collective memory (similar to Bitcoin's global ledger, known as the block chain), money is exchanged by telling everyone in the village about transactions (much like sending out messages in Bitcoin for each transfer), and new money enters the system through the time consuming and randomized process of mining (Bitcoins are created through digital mining). </p>

<p>It's a fairly long blog post, so I'm not sure it makes sense to copy it here; see <a href="http://brikis98.blogspot.com/2014/04/bitcoin-by-analogy.html" rel="nofollow noreferrer">Bitcoin by Analogy</a> for the rest of the explanation.</p>
