S4B Crypto Contest - Season 4

Hi
Friends, it's deprince your favorite stemian from Nigeria,I welcome you all to my blog where I will be sharing with us my knowledge on what blockchain is all about and how it works as well as it's risks. I hope we find this little piece of mine helpful. And by virtue of this contest,I am inviting @ruthjoe, @goodybest, @kuzboy and @samuelebuka to participate in this wonderful contest.

👉What is a blockchain and how does it work?

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Before I go ahead with my explanation,I would really want to take out time to thank Steemit for giving me opportunity to get to know some things about blockchain and crypto in a broader way.

Before now I had no knowledge about anything concerning crypto, blockchain and how it works but see me today talking and writing about blockchain and crypto.

Blockchain is a type of distributed ledger,or a digital record-keeping system for recording transactions and related data in multiple places at a the same time.

Now in blockchain, every computer maintains a copy of the ledger where the transactions are recorded to prevent a single point of failure which is to say that, blockchain makes it impossible for hacking and forging of data stored.

Going further, blockchain is also considered a type of data base but it differs from conventional database in how it stores and manages information. Blockchain stores data in blocks instead of storing them in rows, columns, tables and files which is the traditional way of storing data. Blockchain is the digital way of storing data in blocks there by chaining them together,in addition to this fact is that blockchain is a decentralized database that is managed by computers belonging to a peer-to-peer network instead of a central computer like traditional database.

Bitcoin happens to be the first crypto currency to successfully use blockchain and as a result of this, blockchain has been most often associated with Bitcoin.

Features of Blockchain

. Decentralization.

Unlike centralized database where a central authority such as a bank controls and verifies transactions, blockchain operates on a distributed ledger, and this means that there's multiple transparent participants known as nodes.

. Transparency and traceability

Due to the inherent transparency of Blockchain,it ensures that every network participant has access to identical information, taking for instance, every transaction becomes part of a public ledger that is visible to all participants thereby ensuring trust and network accountability.

👉What is consensus mechanism and why is it important in a blockchain?

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A consensus mechanism is a program used in blockchain system in other to achieve a distributed agreement about the ledger's state. Cryptocurrencies and blockchains benefits from it's use because consensus mechanism replaces slower human mode of verification and auditing.

Consensus mechanism has two types which includes the proof of work (PoW) which is a common consensus algorithm used by cryptocurrencies like Bitcoin and litecoin. It requires a particular node to prove that the work done and submitted by them qualifies to receive the right to add new transactions to the blockchain.

The second type of consensus mechanism is the proof of stake (PoS) which is another type of consensus algorithm that involves allocation of responsibility in maintaining the public ledger to a participant node in proportion to the number of virtual currency tokens held.

Now on the part of it's importance in a blockchain,it is clear that the future of cryptocurrencies may be unknown and volatile but consensus mechanism remain an essential part of emerging technology as they ensure data safety and integrity.

👉Explain the difference between proof-of-work and Proof-of-stake consensus mechanism.

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Proof-of-work (PoW) is a mechanism that Bitcoin uses to regulate the creation of blocks and the state of the blockchain while proof-of-stake (PoS) is seen as an alternative consensus mechanism which delegates control of the network to owners of the token.

In conclusion, investing in cryptocurrencies and other initial coins offerings is highly risky and speculative and this article is not a recommendation by me to invest in cryptocurrencies but if you must do,a qualified professional should always be consulted before making any financial decisions.

 Thanks for your time