Learn Blockchain Basics
It’s time to overcome your frustrations! This mandatory step is an introductory course to understand blockchain and easily picture it. No need to be a pro here, or deep dive into the technical details. To get on the crypto train, you just need to understand the overall idea. The rest will come naturally, with practice and curiosity. So here is everything you need to know about blockchain in order to develop your crypto skills. You will be learning what is blockchain technology, how it works and how it fosters decentralization.
What Blockchain Is
If fiat currencies have their own financial system to effectively and securely share value, so do crypto currencies. While the former is made of official banks, advisors, ATM, banknote printing services and so on, the latter is built without controlling third-parties. This operating system is blockchain technology.
The Difference Between Blockchain, Crypto and Bitcoin
The 3 notions of blockchain, cryptocurrency and Bitcoin are closely related. Indeed, the pseudonymous Bitcoin creator Satoshi Nakamoto actually created Bitcoin, the first successful cryptocurrency ever, and blockchain, i.e. the technology that supports it. However, while commonly mistaken for being the same, they are completely different topics that you must clearly understand and differentiate.
Let’s use a simple analogy. Websites are a well-known Internet application to share peer-to-peer information. Search engines are among the most common ways to use websites by facilitating access to them. Google is one of the most famous and used search engines. To some extent, blockchain, cryptocurrency and Bitcoin share a similar relationship: blockchain is a groundbreaking technology to stock and share peer-to-peer value and information online.
The Power of Blockchain
In short, blockchain is a decentralized and public digital ledger that records any information – like financial transactions as for cryptocurrencies – in an anonymous and immutable way. Such groundbreaking features provide users with significant benefits :
- Because it is decentralized, there are no third parties involved: no banks, no cloudy actors, no administrator, no unexpected fees. Just you and your digital assets.
- As a public record, it provides transparency of all the transactions and allows traceability. While this can permit information counter-checking, it also makes falsifying information difficult.
- Information is recorded in both an anonymous and immutable way. It means that once a data is added to the ledger, it cannot be removed or altered. Nor can it be identified.
Put together, all these features make blockchain very hard or almost impossible to alter or hack. While keeping the system completely peer-to-peer. No need for a central authority to ensure security. That is what makes blockchain technology so powerful. Besides, it provides us with major revolutionary advantages for countless applications, from banking to politics, music, or even to battle fake news. With one same core principle: fostering decentralization of traditional systems to give power back to the people. And this is exactly what cryptocurrencies aim to do with the traditional financial system. Cycle completed
How Blockchain Works (Made Quick and Easy)
For cryptocurrency applications, blockchain allows transparent, secured and anonymous peer-to-peer exchange of value at scale – free from the control of external parties.
Because the network is composed of multiple computers, which can be located all over the world and run by anyone with an Internet connection, it creates a decentralized and distributed transaction validation process.
Now let’s picture an actual succession of large blocks of stone. The hardest and strongest existing kind of stone. Say granite. The blocks are publicly displayed in a single file. So heavy that their order cannot be changed, since they cannot be moved. Each time a coin transaction is validated, it would be engraved forever on the last stone block of the chain. What happens when Mr Pink wants to send 2 coins to Mr White? First of all the previous stone blocks are verified. Since they constitute an unalterable track record of all the previous coin transactions. This is to be sure that Mr Pink really owns these 2 coins. Let’s say he does, because he received them from Mr Orange a few years ago. Once validated, the engraving process can begin, adding a new stone block to the chain, executing the transaction and setting in stone the new situation: minus 2 coins for Mr Pink and plus 2 coins for Mr White. And voilà!
Well, you did it! You went through the blockchain thing! In case you want to further enhance your knowledge, here is a detailed article about it. For now though, the most important thing to remember are the benefits of blockchain. As well as the new possibilities and opportunities it carries. Blockchain applications are endless! Crypto is ‘just’ one of them. Yet a big one. With a wonderful story and philosophy.