It’s almost impossible to explain the whole principle of blockchain in just a few sentences. We’ll try to teach you the basics so you can grasp the underlying technology. We’ll go more in depth in a future article.
What is Blockchain?
Simply put, blockchain is a new way of storing and sending data. That data could be text, binary, images, spreadsheets or any other data. The blockchain stores all these transactions and ownerships. Every transaction is timestamped and signed by a cryptographic hash.
The big difference between a database and blockchain is the way it is stored. Databases (SQL etc.) are centralized on a server and need backups and protectoin; blockchain is decentralized/distributed which means that every node has an exact copy of the entire history of the entire blockchain.
Before a new block can be added to the blockchain, the nodes need to achieve consensus about the validity of the block. This ensures the validity of the entire chain and rules out the possibility of fraude/tampering without the need of a trusted 3rd party. This makes blockchain trustless and easy to verify.
How Does it work?
In short, when a new transaction is made, the nodes start calculating the end result of the block. This must conform with the prior history and the correctness of the signatures from the processed actions. If the majority of the nodes agree that this is the case (consesus) then the block is added to the chain.
The most (in)famous and well known example of a blockchain network is Bitcoin. The first big experiment in blockchain technologie and digital money, started right after the recession of the 2008 house market crash and followed by the worldwide banking crisis. Satoshi Nakamoto (cover name) published his whitepaper on Bitcoin and some time later started the experiment with the release of the wallet and the genesis (first) block on the 3rd of januari 2009
These days, Bitcoin is used as money. To transact between people and businesses; but also as a means of exchange and a store of value.
In the wake of Bitcoin, a lot of copies/spinoffs (forks) came into being. Building on either blockchain fundamentals or Bitcoin technology they each try to tackle a problem for which they see a market/solution. Most of these “altcoins” however have features/solutions that can have (or already have) Layer2 solutions on top of Bitcoin.
It’s a very tricky world and an altcoin that promisses the world today and is worth its weight in gold, could be the scam or failure of tomorrow and be worth less then a sandwich.
That was the main reason to set up this website. You’ll have to DO YOUR OWN RESEARCH and become your own crypto-expert. Don’t be a sheep and get pulled into a scam or piramid sheme. Think for yourself, be sceptical!