If you have been following banking, investing, or cryptocurrency in the course of the last ten years, you might be comfortable with “blockchain,” the record-keeping technology behind the Bitcoin network. Furthermore, there’s a good possibility that it just bodes well. In attempting to learn more about blockchain, you’ve most likely encountered a definition like this: “blockchain is a distributed, decentralized, public ledger.”
The good news is that blockchain is really easier than that definition sounds.
What is Blockchain?
If this technology is so complicated, why call it “blockchain?” At its most elementary level, blockchain is reasonably just a chain of blocks, yet not in the conventional manner of those words.When we say the words “block” and “chain” in this unique circumstance, we are really discussing digital information (the “block”) stored in a public database (the “chain”).
“Blocks” on the blockchain are comprised of digital pieces of information. Specifically, they have three parts:
Blocks store information about transactions like the date, time, and dollar measure of your latest purchase from Amazon.
(NOTE: This Amazon example is for illustrative purchases; Amazon retail doesn’t work on a blockchain principle as of this writing).
Blocks store information about who is engaging in transactions. A block for your lavish expenditure purchase from Amazon would record your name alongside Amazon.com, Inc. (AMZN). Instead of using your original name, your purchase is recorded without any identifying information using a unique “digital signature,” similar to a username.
Blocks store information that differentiates them from other blocks. Much like you and I have names to distinguish us from one another, each block stores a unique code called a “hash” that permits us to tell it apart from each other block. Hashes are cryptographic codes made by special algorithms. Suppose you made your lavish expenditure purchase on Amazon, yet while it’s in transit, you decide you can’t resist and need a second one. Even though the details of your new transaction would look nearly identical to your earlier purchase, we can still tell the blocks apart as a result of their unique codes.
While the block in the example above is being used to store a single purchase from Amazon, the reality is a little different. A single block on the Bitcoin blockchain can actually store up to 1 MB of data. Depending on the size of the transactions, that implies a single block can house a few thousand transactions under one roof.
Blockchain vs. Bitcoin
The objective of blockchain is to permit digital information to be recorded and distributed, however not edited. That idea can be challenging to wrap our heads around without seeing the technology in action, so how about we review how the earliest application of blockchain technology actually works.
Blockchain technology was first drafted in 1991 by Stuart Haber and W. Scott Stornetta, two researchers who needed to execute a system where document timestamps couldn’t be tampered with. However, it wasn’t until almost two decades later, with the launch of Bitcoin in January 2009, that blockchain had its first real-world application.
The Bitcoin protocol is built on the blockchain. In a research paper introducing the digital currency, Bitcoin’s pseudonymous creator Satoshi Nakamoto alluded to it as “a new electronic cash system that is fully peer-to-peer, with no trusted third party.”
Bitcoin is halving set to occur on May 11, 2020, at around 4 pm est. To explain what a Bitcoin Halving is, we should first explain a bit about how the Bitcoin network works.
Bitcoin and its blockchain are a collection of computers, or nodes, around the world that all have Bitcoin’s code downloaded on them. Every one of these computers has the entirety of Bitcoin’s blockchain stored on them. This implies every computer has the entire history of Bitcoin transactions, which guarantees that nobody can cheat the system as each computer would deny the transaction. In this manner, Bitcoin is entirely transparent, and nobody can make a transaction without everyone seeing it happen. Indeed, even the individuals who don’t participate in the network as a node or miner can view these transactions are taking spot live by looking at block explorers.
- Bitcoin is halving on May 11, 2020, at around 4 pm est.
- A Bitcoin halving event is when the reward for mining Bitcoin transactions is cut in half.
- This event likewise cuts in half Bitcoin’s inflation rate and the rate at which new Bitcoins enter circulation.
- Both previous halvinghas associated with intense boom and bust cycles that have ended with higher prices than before the event.
Cryptocurrency is now LEGAL in India
After almost two years, the Indian crypto community finally won the battle against the Reserve Bank of India (RBI), and crypto enthusiasts are celebrating worldwide. The Supreme Court of India spent judgment, striking down the central bank’s April 2018 circular, which bans regulated financial institutions from providing services to crypto businesses.
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