Understanding Blockchain from scratch. Lesson 1: What's happening underneath
- What is Bitcoin?
- I know that one!!!
- Are you sure?
- Yes. Bitcoin is a cryptocurrency.
- Ok. And what is a cryptocurrency?
- uh uh.
This was when I realized that I knew nothing. After a few hours of researching, I found out that:
Cryptocurrencies are digital "things" or "coins" that I can send and receive through blockchain technology. The transactions are stored in blocks. The information about the transactions is encrypted in hashes by some cryptographic hash functions. And the blocks where the info is stored are mined and validated by people.
Let's split this summary.
All transactions are stored in a blockchain. A blockchain is a database where the info is stored in blocks, and by blocks, I don't mean literally cubes, just a structure like you can see in the following picture.
Cryptocurrencies work in blockchain technology, but the blockchain is a more significant concept than bitcoin and other cryptos. So blockchain is not the equivalent of bitcoin. Cryptography is more extensive (and older) than just cryptocurrencies. So let's keep out the "synonyms."
Do you remember when I wrote "cryptographic hash function"? Well, imagine this function as a "magic box." You enter one thing in the box, and it will give you another thing. What you enter in the cryptographic hash function is data, and it will provide you with a hash. See, It's just an ID: hash.
This hash has to be unique, you can't find the original data by reversing the process, and nobody can get the same hash with different data.
If a friend sends you 1BTC (I want that friend too, let's say his name is Elon), you will want to know how is the state of the transaction, if it's confirmed and when the BTC will arrive at your wallet. HE WILL SEND YOU A HASH. So you can enter the hash in the blockchain explorer and check the status. Your transaction has an assigned hash, unique, and that hash is what's stored in the blockchain.
Ok, the hash is essential here. Miners do bring new valid blocks every 10 minutes, in which all transactions are concatenated and stored. They are just finding a hash header that doesn't already exist. (the "how" will be the lesson 2). When they do it, they receive a BTC reward for allowing the "vehicle" to storage the transactions happening in the next 10 minutes.
The blocks have the following structure:
- Data/Information part- contain the information of the transaction incurred
- Hash- Unique ID of block
- Previous Hash- Hash of previous block
I know how it looks like, but it's pretty easy to understand.
This is a real example of a block in blockchain explorer
Did you see the reward uh? Amazing. (This is an old block, now the reward is 6.25 BTC)
**Interesting fact: **One block can provide storage for (originally) 1MB of transactions, but not all transactions have the same size. So let's say that on average 0.5k per transaction, that would be 2048 transactions. It had to be extended to 2 MB. With BTC rising, check the block stats.
That's gonna be all for today. I'm so thrilled, because I found 10 more topics to study like:
- Bitcoin scalability problem (The block can't be bigger so imagine what would happen if more and heavier transactions were made)
- Block validation (who is confirming your transaction)
- Who can make changes in Bitcoin blokchain if it's descentralized(don't we have a vote?)
- More about Bitcoin mining (I want to be millionaire with my old laptop)
- The bitcoin halving (What about it)
I really hope this isn't tedious, hard to understand, and if I made any mistake, please correct me. I want to give the right information but still a rookie. So if I did it well, give me a thumbs up LOL.
If you missed my introduction, check it here: https://leofinance.io/@mejiasclaudia/understanding-blockchain-from-scratch-my-learning-path
Posted Using LeoFinance Beta
nice! still trying to get my head round it
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