A Start to Understanding Blockchain!
Article 1. My understanding basic of what a blockchain is .
“What is a blockchain? And what’s all the hype about it?”
“What is beneficial about using blockchains?”
“How does a blockchain work step by step?”
“What is a blockchain? And what’s all the hype about it?”
Let me, hopefully, give you a basic understanding first!
Creating ever growing linked digital libraries (called blocks), which are encrypted with Cryptography Technology and a copy of the whole library is distributed to nodes (computers connected to a network), is what makes a blockchain. It was developed in 2009 as the infrastructure supporting the Bitcoin cryptocurrency.
“Uh…okay?”
“So, what does that mean? And what can it be used for?”
It means using Cryptography (practice and study of techniques for secure communication in the presence of third parties) to protect, record and distribute information: we can create an infallible proof of a transaction, that is/can/will be verified by the community as a whole (generally there will be set algorithms for each of the nodes to solve) and not just one by centralized authority.
A blockchain can be used for many things, such as, Smart Contracts (a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract) or recording/tracking: documents, origins of valuables or the transfer of ownership of an identified Physical/Digital asset(s). Blockchains are most famously used for the recordings of digital currency (e.g. Bitcoin, Ethereum and Stellar) transactions between two parties safe and efficiently as a transparent, decentralized ledger .
“What is beneficial about using blockchain?”
Decentralization of trust: enables value flow without intermediaries
Removes the need for a trusted third party, which also means reduced costs and complexity.
Distributed Ledgers
All members of a network gets a copy of an identical system of records, which provides an infallible consensus of a recorded transaction.
Constantly updated
Allows near instant settlements, which will reduces risk in the financial system and reduces capital requirements.
Can be ran with codes (Smart contracts)
Enables blockchains to be self-enforced for terms and conditions of a transaction under certain conditions.
Cryptographic hash functions
Creates security and privacy protocols, that will prevent “double-spending” and reduces chance of fraud.
“How does a blockchain work step-by-step?”
- Someone requests for a transaction.
- Request is then sent to nodes.
- Network then validates the transaction. (using known algorithms)
- Validated transactions are put together to form “blocks”.
- “Blocks” are then added, permanently and unalterable, to existing blockchains.
- Transaction is complete!
My Thoughts: Blockchains are great! It is still fairly new and has many applications.
Can be used to create a platform for real estate investments. (e.g. Equitybase).
Benefits from using blockchain technology could potentially create a universal currency for all.
THANK YOU FOR READING!
