Hi Steem-ians,

I have decided to write a series of articles on the basics of understanding cryptocurrencies and their underlying technology, the block chain. The first in the series will be about the blockchain, the underlying technology behind all the cryptocurrencies and tokens you see on the market.

The reason I came up with this idea, was that I felt that for many people who are new to the crypto-sphere often struggle understanding the concepts and what it actually is. There are many reasons I feel people struggle to understand Cryptocurrency; one being that are too many different jargons that mean the same thing, and secondly many of us (including myself) have no computer science background, this makes understanding cryptography an even bigger uphill task. Also, the blockchain technology is relatively young and it can be implemented in many ways depending on your end objective.

These days, the terms, bitcoin and blockchain are usually thrown around interchangeably, however, the blockchain is the technology that bitcoin is built on and they do not mean the same thing.

What is the blockchain?

At a high level, the block chain technology allows a network of computers (called nodes) to agree at regular intervals on the (current) true state of a distributed ledger. These ledgers can include different forms of data, such as, transaction records, credentials (personal information), and various pieces of information. These ledgers are secured with a mix of cryptography and game theory (which I will explain in following articles), thus, not requiring traditional trusted networks. In essence you are putting your trust in complicated mathematics and not people. This technology enables bitcoin to be transferred across the globe without the need for traditional trusted networks like banks or third party payment gateways (like Paypal).

On a blockchain, transactions are recorded chronologically, forming a permanent chain. The information on the blockchain can be made private and/or anonymous depending on how it is implemented. This ledger is then distributed across all the nodes in the network, thus, the ledgers don’t exist in one particular place. As aforementioned, this removes the need for a trusted third party or intermediary, as copies of these ledgers are updated by every participating node in the ecosystem. The technology becomes even more viable, when combined with a cryptocurrency/token as you can bootstrap an entire network to achieve internet-wide consensus on the current state/authenticity of a block’s contents.

For those who are visual learners, here is a good infographics I found online about how the blockchain works:

One of the interesting applications of the blockchain technology is; Steemit! Steemit actually bridges social media and blockchain in one the most innovative ways I have seen the blockchain applied. With the growth rate of nearly 500+ new accounts per day at this stage, don't bet against Steemit becoming the next Reddit.

Do share what are your favourite applications of blockchain are in the comments below.

In my next few articles, I will explain how bitcoin and the blockchain are related, and the benefits and challenges of the blockchain. So stay tuned, and click the follow button! 😁😁

Sincerely,

Cryptochindian.