@sndbox toolkit posts are designed to help cryptocurrency newcomers get acquainted with the ins and outs of Steemit and the blockchain ecosystem. If you have requests on components or systems related to Steemit that you would like to see explained, please let us know in the comments below.
What is Cryptocurrency?
Cryptocurrency is a digital currency that is created, held and distributed through an online network. (Also called virtual currency, digital money or tokens.)
- The word crypto is derived from “cryptography” which is the practice of secure communication. Cryptography is all around us. It’s an artful form of code-making embedded throughout history, anywhere from WWII's infamous Enigma Machine to secure website browsing of today.
What is Blockchain?
Blockchain is a technology. It's a new infrastructure for data and the backbone for digital currencies like Bitcoin and STEEM. Instead of having a central server where all of your information is held and must pass through, the Blockchain allows for multiple “centers” to distribute and validate incoming information simultaneously. It's a smart and secure mechanism (not just for digital currencies) but also for big-scale community problem-solving.
Building a Block
So what exactly is Blockchain and what does it look like? To better understand how this smart network grows, first we need to know how it’s put together. Before a “Block” becomes added to the “Chain” it must first receive four essential bits of information:
- Identification : An ID code or what’s called a “Hash”
- Timeline : The Hash number from the previous block, organized chronologically
- Transactions : All transfers between a sender and receiver
- Public Key : Identifies both a sender and a receiver
Assembling the Chain
The “Chain” itself is like a super intelligent ledger. What’s a ledger? Think of a library book. A ledger is the little yellow piece of paper tucked behind the back cover. This regimented paper is a recorded list of people who have borrowed the book in the past. It’s a timeline that logs the due date for the book to be returned alongside the name of the person who borrowed the book. In this example - the more book-readers there are, the better validated and secure the chain of information becomes.
So, who puts all this together?
Chains are built by a network of super computers all over the globe. Collectively, they curate the growth of a blockchain, individually, they are called “peers” (also nodes or witnesses or miners depending on the type of blockchain that they operate on).
For the STEEM blockchain - these network-builders are called “witnesses”. STEEM Witnesses are voted on by the entire Steemit community. These individuals make their case for being elected and are trusted members of the community. (Curious to learn more? Click here.)
Faster, Stronger, Collectively Independent.
With this new infrastructure for data - worldwide information can be held more securely, cost less, and be distributed way more efficiently. In a global economy that relies on a growing brain of data everyday; Blockchain is proving to be one of the most disruptive technologies in the internet era. With future posts, we'll speak to the many ways that this burgeoning ecosystem is transforming industries and practices and propelling the world wide web into the 21st century.