Notes

A SHORT Introduction To Blockchain - For Normal People
Crypto-what?
If you've attempted to dive into this mysterious thing called blockchain, you would be forgiven for recoiling in horror at the sheer opaqueness of the technical jargon that is often used to frame it. So before we get into just what a crytpocurrency is and how blockchain technology might change the planet, let's discuss what blockchain actually is.

In the simplest terms, a blockchain is really a digital ledger of transactions, not unlike the ledgers we have been using since way back when to record sales and purchases. The function of this digital ledger is, in fact, pretty much identical to a traditional ledger for the reason that it records debits and credits between people. This is the core concept behind blockchain; the difference is who holds the ledger and who verifies the transactions.

With traditional transactions, a payment from one person to another involves some kind of intermediary to facilitate the transaction. Let's say Rob wants to transfer �20 to Melanie. He can either give her cash in the proper execution of a �20 note, or he is able to use some kind of banking app to transfer the amount of money directly to her bank-account. nft wallet In both cases, a bank is the intermediary verifying the transaction: Rob's funds are verified when he takes the amount of money out of a cash machine, or they're verified by the app when he makes the digital transfer. The bank decides if the transaction should go ahead. The bank also holds the record of all transactions made by Rob, and is solely in charge of updating it whenever Rob pays someone or receives money into his account. Basically, the bank holds and controls the ledger, and everything flows through the bank.

That's a large amount of responsibility, so it's important that Rob feels he is able to trust his bank otherwise he would not risk his money with them. He must feel confident that the bank will not defraud him, won't lose his money, will not be robbed, and can not disappear overnight. This dependence on trust has underpinned pretty much every major behaviour and facet of the monolithic finance industry, to the extent that even though it was found that banks were being irresponsible with our money during the financial meltdown of 2008, the federal government (another intermediary) thought we would bail them out instead of risk destroying the final fragments of trust by letting them collapse.

Blockchains operate differently in one key respect: they are entirely decentralised. There is no central clearing house just like a bank, and there is no central ledger held by one entity. Instead, the ledger is distributed across a vast network of computers, called nodes, each of which holds a copy of the entire ledger on their respective hard disks. These nodes are connected to one another via a software application called a peer-to-peer (P2P) client, which synchronises data over the network of nodes and makes sure that everybody has the same version of the ledger at any given time.

Whenever a new transaction is entered into a blockchain, it is first encrypted using state-of-the-art cryptographic technology. Once encrypted, the transaction is changed into something called a block, which is basically the term useful for an encrypted band of new transactions. That block is then sent (or broadcast) in to the network of computer nodes, where it really is verified by the nodes and, once verified, offered through the network so that the block can be added to the finish of the ledger on everybody's computer, under the list of all previous blocks. This is called the chain, hence the tech is known as a blockchai
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