Blockchain Technology for Dummies
Source: charlesngo Bitcoin and other virtual currencies have been making waves for some time now. A lot of people are interested in cryptocurrencies, and there has been plenty of hype surrounding them. Trying to get to the bottom of how they work, away from all the general excitement, is as challenging as it is important. To really get to grips with how Bitcoin or any altcoin currency works, a functional knowledge of blockchain technology is essential. While other exciting applications for blockchain technology are being identified, it began with Bitcoin and is without a doubt the foundation upon which virtual currencies are built.
The Basis of Miner Nodes
Since Bitcoin and other cryptocurrencies are not subject to any centralised regulation, the conventional methods of monitoring their distribution can’t be used. The solution to that has been the Blockchain ledger. The ledger is totally open-source and public so it can be checked an improved-upon, it is completely anonymous which allows for individual security and it held in cyberspace on a decentralised system of nodes so it can’t ever be lost or retroactively edited. The ledger works on every level. The decentralised nodal system mentioned above is important enough to warrant a little more explanation. A big concern with keeping a virtual ledger for cryptocurrencies is that everyone needs to be able to check it and nobody should be able to change or erase it. The solution is to make sure that the ledger is held in more than one place, which it is – in the series of nodes. Each node is a Bitcoin miner’s computer, meaning that miners are unavoidably locked into the blockchain system. Every new transaction is transmitted to every node in a peer-to-peer way. This isn’t the only way they are locked in; the actual way in which the ledger functions is also inextricably linked to miners. Source: cryptotalks
The Interaction of the Blockchain Ledger and Cryptocurrencies
Cryptocurrencies and the blockchain ledger have ushered in a completely new form of ownership; you can never hold or see your possessions, or even put them in a conventional bank account. All you can do is transfer ownership between Bitcoin wallets, via blockchain, with every transfer transmitted to all nodes in a peer-to-peer manner. And rather than bills, stocks or commodities, what you are transferring is pure data. Recording the transfer of Bitcoin is not all that the blockchain ledger is used for, and not the only reason it is inextricably bound with both the cryptocurrency itself and those who mine it. New Bitcoins are mined by recent transactions being brought together to create a puzzle. Computations and algorithms are used to solve it, usually involving determining a new prime number. The first miner to determine the problem’s unique number gets to batch the transactions together in a bundle called a block. The block is rewarded with a newly-minted Bitcoin after other miners have confirmed that none of the bundled transactions contain attempts to spend any of the same funds twice. The system is totally self-sustaining and regulating. Blocks usually contain 4 pieces of data: a time stamp, a summary of all its included transactions, a reference to the previous block, and Proof of Work to verify what went into creating it. The equations are purposefully difficult to solve, and multiple nodes on the network have to check them before they are verified as being correct. Blocks are strung together on a chain, hence the name of the technology, and each one is then securely hashed, to prevent later editing or removal. Once the block is on the chain, it is impossible to remove.
Further Applications of Blockchain Technology
Source: mobilecasinoparty Those who are pro-blockchain say getting distracted with Bitcoin price swings is missing the point. The ledger’s value, they argue, is in the fact that it proves payments systems that don’t rely on big third parties such as banks and governments can exist. More complex actions are possible in a shared, decentralised manner thanks to the blockchain ledger, its advocates argue, and many serious financial institutions including Citigroup Inc and Goldman Sachs Group have expressed openness for working with it. Where logistical obstacles stopped several processes before, it is believed that blockchain technology can accommodate complicated transactions, international contracts, identity management, integration with the Internet of Things for a more automated world, digitizing of items that have been historically difficult to quantify and more. FunFair, a dedicated online casino cryptocurrency based on blockchain technology, has also just been launched. Where the public ledger technology will end is hard to know, but it does seem fair to say that it’s a gamechanger and that the surface of its potential in the modern world has only just been scratched.