Hello all!
Welcome to my new series on Cryptocurrencies, where I will break down the good, the bad, and the ugly. My goal is to simplify the complexities in Cryptocurrencies, and help the community! If you spot any mistakes or wish to contribute, don’t be shy!
|What is the Blockchain?|
Blockchain is a term which is often thrown around.
“Backed by blockchain technology!"
“Using revolutionary blockchain technology”
“Runs on the blockchain ledger”.
You get the idea. A bit of history on blockchain, it was created by the people behind Bitcoin, specifically associated with Satoshi Nakamoto. The blockchain was created to solve a problem which came with decentralization. Fiat (Physical money) is regulated by banks and governments. For instance, if you wired $500 to a friend, the bank would record this. This is known as centralization.
Now, although we have used this system for ages and ages, one of the various issues regarding centralized fiat(s) was the lack of trust. People didn’t trust the government to stop inflating the price of fiat. Blockchain solves this by making ledgers(s) on which people are able to record any transactions which occur : World Wide.
Here's a scenario. Imagine three people, A, B, and C are going out for dinner, but they forget to bring money. The restaurant agrees the three people can pay them on their next visit, however this still leaves the three people to split the bill at the end. To do this, the three of them each take out a paper and a pen. They create three columns labeled A, B, and C. They all record what everyone has ordered, (Meaning person A is recording what person A, B, and C ordered) and at the end they compare pages to ensure nobody has cheated out.
This is what the blockchain does. When you send cryptocurrency from one wallet to another, people from around the globe are “confirming” this transaction, and once the transaction received “adequate” confirmations, it is put on the ledger.
Now, who confirms the transactions and how do they do it? Miners. The miners are paid by “transaction fees” which you are charged at the time of the transaction. Transactions are confirmed when the miner solves a “problem” otherwise known as a SHA256 hash.
If you have made a transaction and would like to see how many confirmations it has, refer to the links below.
Bitcoin: https://blockexplorer.com/
Ethereum: https://etherscan.io/
A quick google search will allow you to discover blockchain explorers for various other cryptocurrencies.
Thanks for tuning in to my Cryptocurrency blog, and I highly encourage you to educate yourself before you buy!
Have a great day!