For all of us who are wondering what is this new buzzword Blockchain all about? In this article I will try to cut it down for you guys lets start from the very beginning, it all started in January 2009 by an unidentified person or a group pseudonym as Satoshi Nakamoto where they released their very first whitepaper termed as “Bitcoin: A Peer-to-Peer Electronic Cash System.”

What is Blockchain Technology?

Bitcoin is nothing but the name of the very first cryptocurrency or digital currency which is underpinned by blockchain technology. The Blockchain technology is basically a network of nodes or miners who compete or cohesively works to solve complex mathematical problems to make a transaction go through. It maintains a distributed public ledger which keeps the track of every transaction ever happened on the network.

let’s say that you make a bitcoin transaction from your wallet, every wallet has a “private key” it’s nothing but a digital signature and its recorded in the network as a mathematical proof of that specific transaction and validates that it has come from the owner of the wallet. Lots of such transactions take place regularly across the world these transactions are grouped together in a block and secured by strict cryptographical rules. Then further these blocks are sent to the bitcoin network which comprises of high-powered computers or nodes. These nodes or people then further compete by solving complex mathematical problems to validate the transaction anybody who succeeds in validating the transaction gets rewarded with bitcoins. This validated block is then added in the chain of previous blocks creating a blockchain.  The main motive behind bitcoin when it was first created was to develop a decentralized online payment system based on mathematical proofs. Decentralized means it is not governed by anyone neither by its creator or has no central authority it is transferable electronically and instantly with minimal or negligible charges. It was not meant to replace the physical currency or fiat currency but it changed the digital world completely.

Some interesting facts

  • Creator individual or group pseudonym as Satoshi Nakamoto but the actual identity is still a mystery.
  • It is decentralised, thus not governed by anyone neither by its creators.
  • There are only 21 million bitcoins amongst only 17 million are in circulation.
  • The first ever transaction recorded was made by a programmer Laszlo Hanyecz, to purchase Papa Johns pizza’s in 2010 in exchange of 10,000 bitcoins which I am sure he is regretting today 😊

Blockchain

Source: Blockgeeks

Blockchain Security

I tried my best to explain the security of a blockchain in words but somehow it is very difficult to do so. I came across this video by simply explained by savjee on YouTube which can better explain it in a simplified way to check it out.

What is cryptocurrency?

What exactly is cryptocurrency why is it taking the world by storm? Cryptocurrency in a simple term is nothing but a medium of exchange they are a means of carrying out a transaction digitally. They are virtual currencies independent of any authority, government, or any entity, agency, the bank you name it. You must be wondering if there is no central authority then how is a transaction even verified or how does it even have any value and who controls its supply. That’s where the blockchain technology comes in the picture. The creator of the coins decides the supply of the coins and the transactions are validated with the help of cryptographic hash function or SHA256 hash function I won’t be going into the technical details but it’s a very complicated process and in which your computer will try to derive 2256 computational algorithms to get the right value the probability of which is, hold your breaths one in a “quattuorvigintillion” this system of solving cryptographic hash function is very complicated this is where the miners come into picture who solves complex math problems to confirm any transaction which eventually gets added on to the blockchain ledger which validates the transaction precisely and avoids double spending. Double spending means once the transaction is processed and podcasted to the public ledger it’s permanently embedded in the blockchain network and it’s irreversible that means one can’t spend the same bitcoins twice. People or miners who solve these math problems spend hundreds and thousands of dollars doing so building mining rigs and jacking up their electricity bills. Now you must be wondering why these people do that well they do it for bitcoins the miners who solve these problems gets rewarded with bitcoins straight into their digital wallets for their hard work and as of today you get rewarded with 12.5 bitcoins for solving one problem do you know what is the cost of bitcoin at the moment it’s $6500 rest you do the math. The SHA256 hash function is very secure and that’s the reason it’s been implemented and trusted in lots of our modern security systems.

I am not trying to motivate or demoralize anyone by this article. It is only for knowledge purpose. Blockchain technology has evolved massively from past few decades and there are around 1658 cryptocurrencies available in the market at the moment and the number is increasing every single day but out of all these how many actually have a use case in the practical world.

Somehow the cryptocurrency hike reminds me of the dot-com bubble happened in 1997.

We all have heard about the dot-com bubble which started in 1997 and peaked in 2000 & ended in 2002. So, what was the dot-com bubble all about? As the name suggests the bubble revolved around speculative investments in internet companies. simply put across the investors were so impressed with the progress of the internet that they invested in pretty much any tech company with the pulse. They were least bothered about whether or not the company was profitable or at least could eventually become profitable in the future and blindly invested in them. It had such a massive impact that the prices went up by 5% by 1997-2000 only to come down by 5% in 2002. Only a few companies managed to survive such as Pets.com and Amazon etc. It is considered to be one of the biggest examples of human nature like any other mania. I am not saying that the crypto market is hiked and it’s impractical. It’s a revolution in the technology industry and some of the cryptocurrency is solving some real-world problems and some are even better than bitcoin itself but it’s up to you where you want to invest, I would suggest going through the whitepapers of the cryptocurrencies if you are keen to invest and if you are a noob, I would say stay out of it because it’s a very volatile and unpredictable market.

I am sure you all must be wondering hey loop, are you into this cryptocurrency thing. Well, you bet I am 😉.

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