Basics of Blockchain Technology

basics-of-blockchain-technology

no asset has been a greater source of wealth creation than the stock market.

Cryptocurrencies came along and turned this traditional source of wealth creation on its head. 
When 2017 began, the aggregate value of all digital currencies combined equaled just $17.7 billion. However, as recently, the combined market cap nearly was almost $836 billion. That better than 4,500% increase in value is something that the stock market would take multiple decades to accomplish.

What is blockchain technology?

Blockchain is the digital and decentralized ledger that records all transactions. Every time someone buys digital coins on a decentralized exchange, sells coins, transfers coins, or buys a good or service with virtual coins, a ledger records that transaction, often in an encrypted fashion, to protect it from cybercriminals. These transactions are also recorded and processed without a third-party provider, which is usually a bank.

Why was blockchain invented?

basics-of-blockchain-technology

The main reason we even have this cryptocurrency and blockchain revolution is as a result of the perceived shortcomings of the traditional banking system. 

For example, when transferring money to overseas markets, a payment could be delayed for days while a bank verifies it. Many would argue that financial institutions shouldn't tie up cross-border payments and funds for such an extensive amount of time.Blockchain developers want the ability to process payments without a need for this middleman.

How are blockchain transactions validated?

There are two primary ways that transactions on blockchain are validated: proof-of-work (PoW) and proof-of-stake (PoS).

Bitcoin runs on the PoW model. What happens with PoW is that cryptocurrency miners (a fancy term for people with really high-powered computers) compete against one another to solve complex mathematical equations that are a result of the encryption protecting transactions on a blockchain network. The first miner to solve these equations, and in the process validate a block of transactions, receives what's known as a "block reward." For bitcoin, a block reward is paid as a fraction of digital bitcoin.

The other primary validation method is PoS. Rather than using a ton of electricity in a competition to solve equations, the PoS method awards the owners of virtual coins the opportunity to validate transactions in a deterministic fashion. In even plainer terms, the more coins you own of a virtual currency operating on the PoS model, the more likely you are to be chosen to validate blocks and add to the blockchain.

It's worth pointing out that while the PoW method hands out block rewards as virtual coins, the PoS model rewards its stakeholders with the transaction fees paid by the users of the block that's being verified. 

Is blockchain public or private?

basics-of-blockchain-technology

One of the greatest aspects of blockchain technology is the ability for a developer or business to customize it. This means a blockchain can be completely open to the public and allow anyone to join, or it can be totally private, with only certain folks allowed access to the data, or allowed to send and receive payments. Bitcoin is an example of an open-source public blockchain that allows anyone to join, whereas a private blockchain would be perfect for a corporate customer.

Is blockchain viable on a larger scale?

you're probably wondering how viable blockchain is. The honest answer is, "no one knows". 

Lastly, you're most folks don't understand the basics of cryptocurrencies, or the blockchain technology that underlies them. probably wondering how viable blockchain is. The honest answer is, "no one knows."

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