So far we have seen how cryptographic keys are used for the validation of transactions by independent miners. In an open peer-to-peer network like the block chain, miners compete with each other to collect and validate transaction records, and group them into new blocks of data. The first one to create a valid block gets paid in Bitcoins. So what is stopping these miners from deleting previous transaction records in the block chain? In other words, how do we make the block chain immutable or irreversible? To make a block chain irreversible, all the miners on the Bitcoin network have the same copy of the block chain. And the process of adding blocks is such that it is very expensive in terms of the computational power, enhanced electricity to add new blocks. And even more so to change blocks further back in the chain. Any miner trying to add a new block of data is required to provide a cryptographic proof called proof-of-work. To produce this proof, a miner will have to perform multiple rounds of a type of computation called a hash function. That takes in a chunk of data and spits out an alpha numeric value of a fixed length. This computation is made even more challenging by requiring that the resulting hash value has to begin with a specified number of zeros. This is quite challenging because it is impossible to predict what hash values will be produced from a hash function. So a miner will have to keep trying to do the computation over and over again on their data block, each time with a random number inserted into the data until they get the hash value with the require number of zeros. If a miner is able to produce such a has value that begins with the required number of zeros, their computation is complete. The first miner who is able to produce such a valid proof will be earn newly minted Bitcoins and their data block will be added to the end of the block chain, and it will be replicated globally. Note that, unlike traditional currencies that have essential authority that mints physical bills and coins. New Bitcoins can only be created through this process. A mining process that lets miners create and earn new Bitcoins for their computational contribution to the block chain. The hash value that a miner produces along with the new data block will have to be included in the computation of the next data block that miners will try to create. Thus, each data block builds on the previous block in the chain, and it is very difficult to go back and redo all these computations. This feature makes the block chains immutable and hence, are powerful for recording transactions. So to recap the process, Bitcoin transactions request are sent out to peer-to-peer network of minors, who validated the transactions and compete to create a valid block of such transaction data. The first such block gets appended to the block chain and the minor earns a newly minted Bitcoin for their effort. So finally, you may be wondering what Bitcoins actually look like. Some entrepreneurs have minted physical Bitcoins with its public key embossed on it, like this one. But these are novelty items. Bitcoin is a virtual currency, so it doesn't really have to be, or need to have a physical form. It exists only as a digital record. In the next video, we will look at some of the other applications of block chain technology, particularly in the design of smart contracts.