Blockchain Basics (You Got This!) 💪 😎

P2P bitcoin transaction
You getting excited about the Rabbit Hole
  1. Bitcoin’s blockchain connects data and information through computers that are linked on a decentralized network through WiFi (nothing special).
  2. A decentralized network is run by many computers called nodes. These computers are all over the world, and are setup/run by everyday people like you and me. Once the nodes are setup, the process is pretty much automated-meaning it does not take much to maintain the node. The computer runs by itself, and is connected to the blockchain as long as it is turned on. The computer can be used for other activities while also running a node.
  3. In order to act as a node, a download of the full blockchain/ledger (called Bitcoin Core) to a computer is required, which at the time of this article is approx 172GB. Blockchains are often referred to as ledgers, in the original since of a ledger keeping records. In this case, the blockchain is a ledger that keeps records of all transactions, the parties involved, the date/time, the amount transacted. There is other information stored in blocks on the blockchain but this is getting into the weeds as far as cryptography and the technical aspects of the blockchain.
  4. Once this happens, the computer connects to the network of other nodes and starts supporting the Bitcoin blockchain.
  5. When new information enters the network, and is requested to be added to the ledger/blockchain, the nodes (other computers) on the network verify the data/information that is trying to get added to the blockchain.
  6. In bitcoin’s case (the asset), the nodes (being run on many different computers all over the world) are checking to make sure that the sender and receiver of bitcoin are valid, and that the coins that are being transacted are in fact real (digital) coins.
  7. The above process is known as “trustless”. In other words, there is no one single entity verifying transactions or data. The decentralized network (computers running the nodes) verifies everything.
  8. Transactions are anonymous.* As a sender or receiver of bitcoin, personal information is never shared on the blockchain. Transactions are made using digital wallets that contain a public address. This enables the user to conceal their (true) identity while still making transactions.
  9. Once all of the data is verified, the transaction is added to a block which will soon be added to the blockchain. Each block holds hundreds to a few thousand transactions.
  10. The data that is added to the blockchain is immutable. Stick with me, we are going to skim the surface. ONE part of the data included in the block is the PREVIOUS block’s hash (an identifier). In other words, each block in the blockchain is connected by having the previous block’s hash in it’s own block.
  11. The Bitcoin blockchain is reputable. It would cost upwards of $2.5 billion to attack the network and change the data of a block. Which leaves no economic incentive to attack the Bitcoin blockchain. (Typically, when people reference the blockchain under bitcoin, they would just use Bitcoin, but I wanted the concept to be easier to understand.)
thinking….thinking……(Ferris Bueller’s Day Off, if you haven’t seen it you should)

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Data Driven w/ strong Fundamentals, crypto evangelist, never ending learner, music and art nerd. I also play good tunes for cool people. twitter:@adamgdev

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adamgdev

adamgdev

Data Driven w/ strong Fundamentals, crypto evangelist, never ending learner, music and art nerd. I also play good tunes for cool people. twitter:@adamgdev

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