A SHORT Introduction To Blockchain - For Normal People
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Crypto-what?
If you've attemptedto dive into this mysterious thing called blockchain, you would be forgiven for recoiling in horror at the sheer opaqueness of the technical jargon that's often used to frame it. So before we enter what a crytpocurrency is and how blockchain technology might change the world, 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. Best Wallets For Ethereum of the digital ledger is, actually, pretty much identical to a traditional ledger in that it records debits and credits between people. That is the core concept behind blockchain; the difference is who holds the ledger and who verifies the transactions.
With traditional transactions, a payment in one person to another involves some type of intermediary to facilitate the transaction. Let's say Rob really wants to transfer �20 to Melanie. He is able to either give her profit the form of a �20 note, or he is able to use some type of banking app to transfer the money directly to her bank-account. In both cases, a bank may be the intermediary verifying the transaction: Rob's funds are verified when he takes the money out of a cash machine, or they're verified by the app when he makes the digital transfer. The lender decides if the transaction is going ahead. The bank also holds the record of most transactions made by Rob, and is solely in charge of updating it whenever Rob pays someone or receives money into his account. Basically, the lender holds and controls the ledger, and everything flows through the bank.
That's a lot of responsibility, so it is important that Rob feels he is able to trust his bank otherwise he'd not risk his money with them. He must feel confident that the lender will not defraud him, will not lose his money, will never be robbed, and can not disappear overnight. This dependence on trust has underpinned almost every major behaviour and facet of the monolithic finance industry, to the extent that even when it was discovered that banks were being irresponsible with this money during the financial crisis of 2008, the government (another intermediary) thought we would bail them out instead of risk destroying the final fragments of trust by permitting them to collapse.
Blockchains operate differently in one key respect: they are entirely decentralised. There is absolutely no central clearing house just like a bank, and there is absolutely no central ledger held by one entity. Instead, the ledger is distributed across a massive network of computers, called nodes, each of which holds a copy of the entire ledger on their respective hard drives. These nodes are linked to one another via a software application called a peer-to-peer (P2P) client, which synchronises data across the network of nodes and makes sure that everybody gets the same version of the ledger at any given time
If you've attemptedto dive into this mysterious thing called blockchain, you would be forgiven for recoiling in horror at the sheer opaqueness of the technical jargon that's often used to frame it. So before we enter what a crytpocurrency is and how blockchain technology might change the world, 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. Best Wallets For Ethereum of the digital ledger is, actually, pretty much identical to a traditional ledger in that it records debits and credits between people. That is the core concept behind blockchain; the difference is who holds the ledger and who verifies the transactions.
With traditional transactions, a payment in one person to another involves some type of intermediary to facilitate the transaction. Let's say Rob really wants to transfer �20 to Melanie. He is able to either give her profit the form of a �20 note, or he is able to use some type of banking app to transfer the money directly to her bank-account. In both cases, a bank may be the intermediary verifying the transaction: Rob's funds are verified when he takes the money out of a cash machine, or they're verified by the app when he makes the digital transfer. The lender decides if the transaction is going ahead. The bank also holds the record of most transactions made by Rob, and is solely in charge of updating it whenever Rob pays someone or receives money into his account. Basically, the lender holds and controls the ledger, and everything flows through the bank.
That's a lot of responsibility, so it is important that Rob feels he is able to trust his bank otherwise he'd not risk his money with them. He must feel confident that the lender will not defraud him, will not lose his money, will never be robbed, and can not disappear overnight. This dependence on trust has underpinned almost every major behaviour and facet of the monolithic finance industry, to the extent that even when it was discovered that banks were being irresponsible with this money during the financial crisis of 2008, the government (another intermediary) thought we would bail them out instead of risk destroying the final fragments of trust by permitting them to collapse.
Blockchains operate differently in one key respect: they are entirely decentralised. There is absolutely no central clearing house just like a bank, and there is absolutely no central ledger held by one entity. Instead, the ledger is distributed across a massive network of computers, called nodes, each of which holds a copy of the entire ledger on their respective hard drives. These nodes are linked to one another via a software application called a peer-to-peer (P2P) client, which synchronises data across the network of nodes and makes sure that everybody gets the same version of the ledger at any given time
