Blockchain is NOT Bitcoin!

Blockchain is NOT Bitcoin!

in Cryptocurrency, Bitcoin, Blockchain, Blockchain
Today we hear here and there about Bitcoin, Blockchain, cryptocurrencies, Coinbase, digital bubble etc. And when someone beside you starts talking about blockchain you cries inside: hey, guy, I know what you are talking about! And, yeah, you are completely off. Why? Blockchain is not Bitcoin! At all! Bear it in your mind! If it has a “B” letter it does not make it Bitcoin-lock-chain! Actually, Bitcoin consists of 4 major technologies. But stop, how can currency include technologies? Easy! First and foremost it is a technology itself!   Blockchain technology Here you can find out what the blockchain is. And we go further. Blockchain technology has 5 main characteristics or 5 “no”s:
  • No borders
  • No nations
  • Neutral
  • No censor
  • No locks
Now, how this all process works. Let us take an example:
  • You want to make a transaction
  • the transaction enters the P2P
  • “indurates” there
  • gets verification
  • pairs with its colleagues - other transactions to add to Bitcoin’s 1mb block sizes
  • the block’s information (digital ledger technology) again gets verification by anonymous parties
  • blockchain gets a new block which is chained to the others
  • your transaction is complete! My congratulations!
Well, now, let us know what happened to blockchain when you were making the transaction:
  • Blockchain recorded that somebody made a transaction
  • Verified it
  • Kept track of Bitcoins you had sent
  • Everyone saw your transaction through the distributed database but no one knew it was you who had made it.
  • Well, you made it. The good news is that it could not have been falsified.
A Peer-To-Peer network You have seen these queer symbols above (P2P), have thought something like: Hmm, okay, let’s see what’s next and have come here. Good for you! A P2P network is a network between two or more people without third-party’s help. As you remember every move in the network is recorded in the ledger and everyone sees it. This means everyone can verify it and there is no need in the third party. Without the P2P network, Bitcoin would be just a database.  Proof-of-Work As we have said, everyone sees your transaction and can verify it. But do not forget: your transaction needs time and energy to be produced. The miner who has both of these parameters verifies (makes the proof-of-work process) and gets his reward. Cryptography Yes, this is the science that makes cryptocurrency cryptocurrency :) Cryptography is a study that allows two or more people to communicate in the presence of a third party (which does not understand them, of course). Cryptography for Bitcoin works in a few ways. First of all, it is P2P. Secondly, the public key that you use to send someone Bitcoin. It is a ledger which is stored in each block and allows them to verify that the previous block did occur through the POW system. Hashcash is the verified cost-function behind the POW system, essentially making it harder and harder to verify the transactions over time and it uses a SHA-256 protocol. With the help of the latter Bitcoin blocks are verified by a hash that allows it to be verified and identified. With these four technologies listed above, it allows Bitcoin to become a global decentralized, P2P, cryptographically secure currency.

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