The Blockchain

An Introduction to Blockchain, Bitcoin ₿, and related concepts

Martin Thoma
Published in
12 min readJan 12, 2021

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An example of a blockchain. Image by Martin Thoma.

Bitcoin crossed $40,000 USD for the first time recently, so it’s again in the news. Bitcoin is just the most-known cryptocurrency. It is one application using a blockchain. In this article, I will walk you through some core concepts of blockchain and cryptocurrencies. This article is written for beginners and a bit fluffy in some areas. There will be follow-up articles to address that. Let’s start!

The Idea of a Ledger

German Ledger from 1828 (Source: RaphaelQS)

Suppose we lived in a simpler world without credits and with only one bank. Everybody just owns a non-negative amount of money. The bank keeps track of transactions. Let’s say we have three students living in the same shared apartment: Anna, Bob, and Charlie. They all put $100 USD in their bank account:

Date             | Sender    | Receiver |  Amount
-------------------------------------------------
2021-01-01 06:00 | (Deposit) | Anna | $100
2021-01-01 06:01 | (Deposit) | Bob | $100
2021-01-01 06:08 | (Deposit) | Charlie | $100

Now they make a few transactions. Before the bank's system accepts any transaction, it checks if the account balance would still be non-negative. To get the account balance, they can sum up all previous transactions. To make it a bit easier to follow, I will shorten the “Date” to just a number counting up and add the balance after the transaction is executed for Anna, Bob, and Charlie to the table. The ABC columns are just for you to keep track of; they are not necessary:

Date | Sender   | Receiver | Amount |       A  |  B   |  C
------------------------------------| ------------------
1 | (Deposit)| Anna | $100 | $100 | $0 | $0
2 | (Deposit)| Bob | $100 | $100 | $100 | $0
3 | (Deposit)| Charlie | $100 | $100 | $100 | $100
4 | Bob | Charlie | $20 | $100 | $80 | $120
5 | Bob | Anna | $30 | $130 | $50 | $120
6 | Anna | Bob | $130 | $0 | $180 | $120

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Martin Thoma

I’m a Software Engineer with over 10 years of Python experience (Backend/ML/AI). Support me via https://martinthoma.medium.com/membership