WHAT IS BLOCKCHAIN?
Many experts believe that blockchain is a modern and revolutionary tool that should change our lives, just as the printing and Internet industries have done before, and it promises to completely change the way transactions are organized from the very beginning , and encourage governments, large companies, mutual funds, and entrepreneurs. But what is blockchain? Let’s go back to the basics and better understand how this new technology and its applications work.
Basics of blockchain
It was money from the beginning. The tools of financial transactions, from the original currency to paper currency, to biblical currency, are based on the trust of users and use them as a unit of account, a medium of exchange, and a means of value storage.
The guarantee principle of the central agency (the state, bank, or municipality for the local supplementary currency). With the advent of electronic transactions, from the introduction of checks to the creation of payment cards,
the dematerialization of currency has accelerated in the past 25 years, paving the way for thinking about creating unconventional currencies that are independent of what is called digital currency.
They have dematerialized versions because they are based on encryption protocols.
Each unit of digital currency is a unique sequence of numbers that users can send to each other in online transactions.
The numbers are easy to reproduce, and if they are coins, they can be reissued several times in 1990. David Chaum, the developer of DigiCash electronic currency, tried to solve this problem by creating a single central ledger to record each user’s transactions,
Thereby ensuring that not one unit of every currency unit can be in two places at the same time. The integrity of currencies and transactions is guaranteed by a single central ledger.
However, the solution offered by DigiCash has its limitations as it is exposed to the same dangers as any centralized registry
such as databases for banking transactions, credit card transactions, property titles, ID cards, driver’s license, reservations with an airline, etc
it does not guarantee that the content of the register is incorruptible and infallible, for example changing the database, excluding transactions that it does not approve, or even losing the registered data. In October 2008, Satoshi Nakamoto, whose identity of the person or group behind this pseudonym is still unknown, published his whitepaper “Bitcoin: A Peer to Peer Electronic Cash System” in which he proposed a new form of the digital currency
Bitcoin that overcomes this trap by relying on a new protocol, a blockchain that enables a decentralized verification system, Bitcoin is no longer the responsibility of a centralized authority, but of a relationship called “peertopeer” onship, i.e. a computer network whose participants are released from a central server.
Bitcoin and Block are the same?
No, it’s not, Bitcoin or CryptoCurrency is a Lil part of BlockChain,
To say that Blockchain and Bitcoin are the same things is misinformation. However, it can be said that all Bitcoins are part of Blockchain (but Blockchain is not part of Bitcoins).
So how do you tell the two apart? We must understand that the Blockchain is the technology underlying Bitcoin.
In other words, Bitcoin uses the Blockchain. He is the first, and so far the most famous, use of Blockchain technology. But, we also have over 3,000 other cryptocurrencies using it that could one day dethrone bitcoin.
Why do we talk about blockchain all the time?
It is true that we hear about it all the time. Blockchain technology is extremely powerful because it eliminates the need for centralization in all applications.
An example? The currency you use every day. Have you ever wondered why a blue rectangular ticket can buy 4 movie tickets? Because the European Central Bank (ECB) told us that this note has a value of 20 euros and the law of supply and demand (supply to the ECB) does the rest.
If the notes in your wallet have a value, it is because it is guaranteed by a third party (in this case the ECB) cryptocurrencies (based on blockchain technology, if properly followed) have broken this principle: more banks, more institutions, more state
The only authority that guarantees the value of these Cryptocurrencies?The blockchain. So without arbitrary decisions, without misinformation, without opacity. In addition, you no longer need a centralized system to secure your transactions. Tired of the transaction fees you pay every time you withdraw money from an ATM abroad? they exist thanks to blockchain.
Banks, which are third parties at the heart of centralized systems, charge fees, not the blockchain! Be careful though, a transaction on the blockchain still has fees. These fees are variable and depend on the cryptocurrency you are trading (as not all cryptocurrencies use the same portfolio creation and exchange), we also advise that all your transactions are secure and registered on the blockchain.
Bitcoin and BlockChain
Tokens with several applications Within the computer network of a blockchain it is possible to exchange “tokens”, which are tokens to which a certain value or service is assigned.
There are three types: “Currency Tokens”, which correspond to the internal currency of the blockchain, “Utility Tokens”, which enable access to services within the blockchain, and “Security Tokens”, which are linked to real assets.
Cryptocurrencies, led by Bitcoin, are the internal currencies of the blockchains that give them their name. IOS (Initial Coin Offerings), these collections over blockchain, allow investors to purchase “utility tokens”, which are tokens that give them access to certain services developed by the company. After all, the “security tokens” correspond to part of a real value. active, according to the securities model known in the financial sector.
Bitcoin is a currency that is designed in such a way that, unlike traditional currencies, units of currency are introduced gradually, they are not issued by a central authority, and the total number of units issued is set in advance.
The last bitcoin is expected to be produced in 2140. Bitcoins are stored in Bitcoin addresses, the key of which is a series of unique letters and numbers that can be stored on a computer, smartphone, or even on a piece of paper.
Bitcoin as payment, a record of the transaction is stored in the memory, the transactions are grouped into blocks, each block corresponds to 10 minutes of Bitcoin transactions, all participants in the network provide their computing power to check and commit these blocks to the system.
This is known as “mining”.Participants who have previously been placed in the competition are paid according to their participation in the calculation and receive a percentage of the bitcoins newly issued by the system. The system that brings all the blocks together is called the blockchain.
Chronologically, and each block contains a digital signature (called a “hash”) of the previous block, which regulates the arrangement of the blocks and ensures that a new block can only be added to the blockchain where the previous block ends. The blockchain, i.e. a copy of the log of all transactions made since Bitcoin was created, is updated by anyone who installed the Bitcoin software. To ensure that the system works normally, blockchains are taken from the computers of those who installed the software so that the system always knows exactly how many Bitcoins each user has in their wallet, they cannot be copied or spent more than once.
Blockchain ”is a term that is now widely used. It is important to understand its contours. The “blockchain” technology, which appeared about ten years ago, is initially based on the provision of a computer log consisting of an encrypted language that enables the development of a transparent and decentralized registry in which transaction blocks are securely recorded.
Originally the “Bitcoin” protocol, from which the tokens of the same name were issued, pioneered and announced other “blockchain” languages that had been developed since its inception (2008). Because of the virtues that a decentralized and distributed registration can enable, especially concerning cost reduction, reduction of the central counterparty risk, and IT security in the transmission and storage of information, the blockchain aroused rapidly growing interested among financial market players to reduce middlemen), blockchain became in Year 2 0161 defined in French law and then resumed in 20172, confirming its innovative role in accounting for the financial sector, with potential on this single economic sector.
The establishment of contracts that are executed alone and if n human intervention (“Smart Contracts”) or the financing of entrepreneurial projects through the issue of digital tokens (initial “ICO” Coin Offerings) pave the way for many possible developments. They are also a strategic issue for all economic sectors that are forced to rethink their model (e.g. concerning distribution and transactions).
If you are still confused between bitcoin and blockchain you can read this What Is The Difference Between Blockchain And Bitcoin?
They’ve written very great article on that, Check that out.