LUCKY'S CRYPTO GUIDE FOR BEGINNERS ~ OVERVIEW OF INFORMATION TO COME
If you are reading this, you are either new to cryptocurrency or considering getting on board with it in some fashion, whether it be trading digital currency, application or code production, or something else relative to crypto and the blockchain. Be advised, this is one of many articles I will be releasing for those new to crypto, and at a later date I will begin more advanced articles to follow up with. I'm hoping that my insight and knowledge can help some of you grow within this new era that is upon us, both professionally and financially.
WHERE DO I START IN CRYPTO?
The most important information one can obtain when dealing with cryptocurrency in the very beginning, is familiarity with what exactly you are dabbling with. Walking into (or investing into) cryptocurrency blindly with the good ole' fashioned "I'll find my way around" attitude is going to do one of three things, or all of the following. One, going at this with no understanding of the blockchain or crypto WILL cause you to lose investment equity and your hard earned money, if not all of it. Two, you will not understand what is going on and you will get overwhelmed, causing you to make poor decisions based on lack of possessed knowledge. Three, you will miss out on the ground floor of some of the biggest investment opportunities of our lifetime due to lack of understanding and inability to perform efficiently. It is imperative that you learn how crypto was created, why it was created and understand the the basic as well as inner workings of the blockchain if you ever plan to succeed in the crypto world. This article was created to give those with little or no understanding and knowledge the stepping stones they need to get their feet wet and advance successfully in the market while continuing to grow with significantly better understanding.
SO, WHAT EXACTLY IS BLOCKCHAIN TECHNOLOGY
Before I give the textbook and plain term definitions of the blockchain, I'm going to give you some very valuable information to get you started. One thing blockchain technology is that blockchain technology is the backbone of every cryptocurrency in the world, from Bitcoin on down to smaller, "no-name" coins that are widely ignored. Blockchain technology is the only reason these currencies are available today, and it is the sole reason that many, many companies, programs, scripts and apps exist today, including our beloved Steemit. Without getting overwhelming, the code and scripting put into the blockchain, enable it to grow and continue to produce, to an almost infinite level. It is the lifeblood of many of today's ventures, this crypto craze, Bitcoin AND every exchange and currency available today.
If you want to go by the book, blockchain technology is a "decentralized" ledger (or record) of all transactions across a P2P (Peer to Peer) Network with complete anonymity (meaning you can keep your identity hidden if you so choose). It’s a complete and accurate record of events that is shared between many parties and networks. One key feature is that once information is entered into the blockchain, it cannot be altered or manipulated by anyone or anything. It is forever recorded and becomes history in the blockchain, eliminating the possibility of fraud and hiding of records, which is famous with large corperations and such. So what does all this really mean? Let me start by breaking down some of the key terms in this definition of the blockchain.
SO WHAT DOES DECENTRALIZED MEAN?
For starts, "decentralized" means that it is not controlled by any one person or organization, more specifically a government. For example, the US government controls the US Dollar, making USD a centralized currency. Bitcoin, is a anonymous and uncontrolled digital currency, regulated and internally controlled by nothing except the value the market drives it to. No world government can regulate or control the value and use of the blockchain, ultimately meaning the currencies created from blockchain technology, cannot be manipulated by world government. This exact lack of control has spiked fear among countries such as China and Korea, who famously control every aspect of a citizen's life.
To simplify even more, a blockchain is politically decentralized (unable to be controlled by anyone such as government or groups), architecturally decentralized ( no one server or system controls the blockchain meaning no chance of system shutdown from a main server failure) and a blockchain is logically centralized (meaning there is one common goal which the entire network works endlessly to achieve). These are all tremendous benefits to the future in economics, business, technology and currency, which I will also explain in later articles.
WHAT IS A PEER TO PEER NETWORK?
A 'P2P Network" or Peer to Peer Network, is a network (group) of computers that are combined together for a common purpose. The "peers" are essentially computers that are connected to each other on the internet. Files and actions can be shared between peers (computers) on the network, without the need of a central server. A central server is one large, powerful computer system that would typically be the central hub for performing an action such as downloading a song or obtaining a file. Each computer (peer) can share and provide the files (movies, songs, etc) or actions (combining computer processing power)the central hub would, making it easy to increase the availability of files and certain actions while not having to rely on the central hub. In other words, each computer on a peer to peer network becomes a file server as well as a client.
One great example of a P2P system is BitTorrent, one of the most reputable and size-able torrent sites that manages to stay under much legal scrutiny due to the network thriving off of pirating of media and software. With it, is KickAssTorrents, The Pirate Bay and many, many more. These P2P networks all contain files of media to some extent, and each member of the network opens up select files or all of their files and makes them available to other members of the network. Everyone else in the P2P Network is virtually a server , or one who provides these files and a client is someone who seeks out these files to obtain them through downloading.
Bitcoin itself, is designed and operated as it's own Peer to Peer Network, as is the vast majority of platforms and currencies on the blockchain. In example, Steemit itself is a P2P Network, if that sheds a little light on it.
ARE THERE OTHER WAYS TO DESCRIBE BLOCKCHAIN TECHNOLOGY?
An even simpler way of looking at the definition of the blockchain,is that the blockchain is a group of computers from various locations (mine, yours and everyone else's on Steemit) that dedicate (or lend) their computational power to everyone in the system, to accomplish amazing feats (such as building the code and system to record transactions, create currency, etc). Before the blockchain technology was created, the same principle existed with Peer To Peer networks, or P2P, where everyone on the network would lend part of their processing power and data to the entirety of the group to provide media, programs, etc. A fine example of this is The Pirate Bay or KickAssTorrents. With the blockchain being basically the foundation of everything crypto, our processing power (computational power more specifically) of our computer is combined with mass numbers of others, to more or less process code to create these ledgers that make up the block chain. Commonly, cores or centers of large amounts and processing of power are called nodes.. How it works varies on the application of it's use, but it all boils down to the same great things. Transparency, efficiency and unlimited growth potential.
WHERE EXACTLY IS THE BLOCKCHAIN LOCATED?
Due to the transparent nature of cryptocurrency and anything operating on the blockchain, the blockchain isn’t located at one central hub, like some guy's massive computer in a large office somewhere in the world. For example, most cryptocurrency blockchains are actually managed by distributed networks called nodes. These nodes all have a copy of the entire blockchain, which is a record EVERY single transaction and event to ever hit the blockchain . Nodes will forever rise and fall, or come and go to simply put it, synchronizing their own copies of the blockchain with those of other users who are also members of the network. By distributing copies of these records and providing transparent access to these records, the blockchain will never vanish, fall to technical difficulties or simply stop working. It’s a decentralized system that is reliable, secure and built to not only last, but grow exponentially. So, to sum it up, both you and I are now part of the blockchain. The blockchain is not located in one place, it is located everywhere.
HOW DOES THE BLOCKCHAIN WORK?
I personally find blockchain technology to be the best invention since the internet itself, and I believe it will far surpass everyone's expectations as far as growth and usage. But, how exactly does a transaction work? Well let me break it down as best as possible for you. Say, John and Mike owe you $100 from a loan last week and need to pay their debts. The problem is that they both like across the USA on the east coast and you reside on the west coast. There are 3 ways to manage this transaction.
Trust - Meaning, if we are all friends, then we would trust that one would pay the debt of the other (and even that is a generous thought among friends). But just imagine if we were strangers, would you trust John or Mike to uphold their end of the deal, especially with such distance? Either way, paying their debts, would not be easily accomplished due to the distance.
Contract - You could make John and Mike sign a legal contract, stating that they will pay the debt, which would make them more inclined to do so. However, what if they void the contract? You would then have to either eat the loss and kiss your money goodbye, or take it upon yourself to hire attorneys, pay legal fees to have it processed and you would wait for a while to get a verdict in court in your favor. Even if you did, there's still nothing that can make them pay their debt to you and could still end up eating this as a loss. This doesn't seem to be the best option either.
Third Party - This simply means that you could have a third party handle the transaction. Say, a friend of yours, Linda, says she will gladly take the $200 total from John and Mike, and on her trip to the west coast she will bring it to you. But say she loses the money, gets robbed, or just flat out decides to keep it. Then you have lost out on your money entirely. Of course you could always have each party send you the money via Western Union ( a third party company) After fees to deliver, you'd be lucky to receive half of your money, which is not very acceptable. Obviously the use of a third party is not very attractive, is it?
So, with the three conventional ways of handling a transaction not being optimal, this is where the blockchain comes into play. You know just as I do, that trust and contract, well they only get you so far and you have a chance to lose your money, as with any third party. But what if there was a fourth option, that is not only effective and quick, but also cheap? Well the great thing is that the blockchain exists and this is a valid, and preferable option.
John and Mike could simply utilize and existing code (program) on the blockchain, or write their own code (program), which would take the $100 from each of them and store it safely on the blockchain. Now, your $200 you were owed, has made it to the blockchain. But what does that really mean? This transaction would then become part of the blockchain, and able to be seen by anyone in the world. Though it is seen by anyone who so chooses to see it, you are still anonymous, as in there would be user keys and transaction numbers instead of John and Mike's credentials, showing the world who they are. This code (program) that both John and Mike used, is scheduled to deliver your money to you in 1 hour, per their request and your acceptance (though most transactions are much faster). At that point and hour would pass, and the code (program) would send the $200 directly to your "wallet", or where you store your monies. Boom, done, no worries, no fees and you were paid back with no hassle. You can then transfer your money to a bank account, which I will break down in another article on wallets and using the exchanges across the world wide web.
Now, this particular instance, involving a couple hundred dollars may not really be the most cost effective thing to do if John and Mike knew nothing about coding and had to pay someone to construct a program for this purpose. But, it was an easy and simplified way to explain. Just imagine however, how this could impact the business world, the real estate world and much more. We could eliminate the hands of greedy Uncle Sam from pilfering through our hard earned money and taking what we have worked for. We could eliminate the potential of third parties failing and losing our money. We could eliminate anyone from ever having to know what we so choose to spend our money on. We can make large transactions, in record time, with complete security, transparency and anonymity. This is the future of how we spend, and these are the reasons why.
THERE IS IS LADIES AND GENTLEMEN, AN EXPLANATION OF THE BLOCKCHAIN TO SOMEONE WITH NO IDEA WHAT IT IS. STAY TUNED IN FOR PART 2, WHICH WILL PICK UP WHERE WE LEFT OFF!
So folks, I hope this was broken down enough to give you a brief overview of the blockchain and how exactly it works. In my next piece, I will explain how the blockchain actually grows and it kept in order. It will be significantly shorter than this piece, but will be just as informative because I get to explain how "mining" goes hand in hand with the blockchain. Though, this was kind of drawn out, I hope I was able to keep you on board long enough to give you the basic information you need in order to move onto the next article, which will be releasing no later than tomorrow.
If you enjoyed my article, please take the time to show me some love and leave some comments, upvotes, follow me and resteem my articles as you see fit. It's been a pleasure helping folks on here grow with the Steemit community, so please, continue to keep up with my posts.
Thanks again everybody!
