What is blockchain? A simple explanation for beginners
A blockchain is a digital ledger of all bitcoin transactions. It is constantly growing as "completed" blocks are added to it with a new set of recordings. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the block chain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
How does blockchain work? An ELI5 explanation
If you want to understand how blockchain works, you need to understand the basic concepts of cryptography and distributed databases.
Cryptography is the process of secure communication in the presence of third parties. When you send someone a message, you are using cryptography to protect that message from being read by anyone other than the intended recipient.
A distributed database is a collection of data that is stored on multiple devices. Whenever you want to access that data, you need to get access to the same copies of it on all of the devices. This is where blockchain comes in.
Blockchain is a distributed database that uses cryptography to protect the data. Whenever you make a change to the data in a blockchain, you use cryptography to encrypt that change so that only the person who made the change can see it.
This process is called “mining” and it is how new blocks of data are added to the blockchain. Mining is a bit like solving a puzzle. miners try to find a solution to the puzzle by guessing random bits of data. If they are correct, they are rewarded with new Bitcoin (or another cryptocurrency) tokens.
But that’s just the basic idea. To understand how blockchain works in practice, you need to understand how cryptocurrencies work.
So what is this blockchain everyone's talking about?
A blockchain is a distributed database that allows for secure, tamper-proof transactions. It is often described as a digital ledger of all cryptocurrency transactions. Transactions are grouped into blocks, which are then chained together and secured by cryptography. Bitcoin, the first and most well-known blockchain, was created in 2009.
Breaking down blockchain: how the distributed ledger technology works
Blockchain is a distributed ledger technology that enables secure, tamper-proof transactions. Transactions are verified by network nodes and recorded in a public database. Nodes can agree on the legitimacy of a transaction by solving a cryptographic puzzle. Once a transaction is verified, it is added to the blockchain.
Blockchain is unique in that it allows multiple parties to process and verify transactions without the need for a central authority. This makes blockchain an ideal platform for transactions that require trust, such as those involving financial transactions or medical records.
The blockchain technology has several applications beyond transactions. For example, it can be used to create a tamper-proof record of ownership for digital assets. This could be used, for example, to prove ownership of intellectual property or to track the movement of goods.
Decentralized vs. distributed: what's the difference?
Decentralized refers to a system where there is no central authority or control. This type of system is often referred to as a peer-to-peer network. Distributed refers to a system where different nodes (computers) are spread out throughout the network.
What is a DAO? Explaining decentralized autonomous organizations
A decentralized autonomous organization, or DAO, is a type of organization that uses smart contracts to manage its interactions with other actors. DAOs are similar to traditional organizations in that they have a set of individuals who are responsible for making decisions and carrying out tasks, but they are also powered by blockchain technology, which allows them to operate without the need for a central authority.
Traditional organizations are hierarchical, meaning that the top level of the organization is responsible for making decisions that impact the entire organization. This makes it difficult for the organization to respond quickly to changes in the environment and it can be difficult to ensure that all members of the organization are aware of decisions that are being made.
DAOs are decentralized because they are powered by blockchain technology. This technology allows for the creation of a distributed ledger that can track all of the interactions between the members of the DAO and the outside world. This makes it much easier for the DAO to make decisions and to respond quickly to changes in the environment.
DAOs also have a different structure than traditional organizations. Rather than having a set of individuals who are responsible for making decisions and carrying out tasks, DAOs are powered by smart contracts. These smart contracts allow for the automatic execution of the actions specified in the contract, without the need for any human intervention. This makes it much easier for the DAO to achieve its goals and to manage its interactions with other actors.
What is a smart contract? The basics of self-executing code
A smart contract is a digital contract that runs on a blockchain, a distributed ledger technology. A contract is a set of conditions that must be met in order for a transaction to be considered valid. When a transaction is completed, the outcome of the contract is automatically enforced.
A smart contract is essentially a computerized agreement that is automatically enforced. When two parties enter into a contract, they agree to certain terms and conditions. If one of the parties fails to meet their obligations, the contract is automatically enforced.
A smart contract is stored on a blockchain and can only be executed by computers that have the appropriate software installed. When a smart contract is executed, it creates a digital record of the transaction. This record can be easily verified and is permanent.
What is an ERC20 token? Understanding Ethereum's native currency
An ERC20 token is a type of cryptocurrency that runs on the Ethereum blockchain. ERC20 tokens are designed to be interoperable with other Ethereum-based applications and can be traded on decentralized exchanges.
How to buy Bitcoin: A beginner's guide to cryptocurrency investing
There are many ways to buy Bitcoin, some of which are outlined below.
1. Use a Bitcoin exchange
One way to buy Bitcoin is to use a Bitcoin exchange. These platforms allow you to buy and sell Bitcoin and other cryptocurrencies.
Some of the best Bitcoin exchanges include Coinbase, Bitfinex, Kraken, and Binance.
2. Mine Bitcoin
Another way to buy Bitcoin is to mine it. This involves using your computer to solve complex mathematical problems in order to gain Bitcoin.
Bitcoin mining is a competitive activity and is not easy to get started. For a detailed guide on how to mine Bitcoin, click here.
3. Get Bitcoin through a Bitcoin wallet
You can also obtain Bitcoin through a Bitcoin wallet. This is a software application that allows you to store your Bitcoins and access them from anywhere.
Some of the best Bitcoin wallets include Bitcoin Core, Electrum, and Armory.
What is an altcoin? Everything you need to know about altcoins
An altcoin is a digital or virtual currency that is not Bitcoin. Bitcoin is the leading cryptocurrency and the most well-known altcoin. Altcoins are created by taking an existing cryptocurrency, like Bitcoin, and modifying its code. This makes the altcoin different from Bitcoin and allows it to have its own unique features.