Fundamentals of Blockchain

The goal of blockchain is to be a financial system that maintains user anonymity and does not rely on a centralized authority.

We needed a ledger system for tracking balances and preventing duplicate transfers. To maintain the goal of decentralization, the ledger also had to be opened and shared, so any participant can view and confirm the transaction. This brought legitimacy to the ecosystem.

Recent transactions are linked together in blocks containing all ledger changes. Then those blocks are linked together, telling the story of every transaction throughout time. This ledger is the blockchain.

Blockchain is just a file that is shared amongst the people all over the world. New transactions are broadcast by users, and ”mined” by speedy computers to add new blocks to the chain of blocks. Then that file is shared amongst the network, confirming transactions. 

The fastest miner gets a small reward. This keeps the blockchain moving forward and ensures there is no duplicate spending or fibbing about balances.


Blockchain Terminology

Blockchain

A digital ledger that is widely shared and contains a record of every transaction for the crypto it represents

Blocks

A group of transactions broadcast to the blockchain. Miners receive a reward for completing "blocks" of verified transactions, which are added to the blockchain.

Mining

Mining is the process of decrypting and encoding new transactions into the blockchain

Miners

Miners are human and computer systems that execute the mining task

Decentralized

Shared ownership - A concept where no particular entity exercises ownership. Instead, the power is shared by all participants

Satoshi Nakamoto

The name of the author of Bitcoin and Blockchain whitepaper

White paper

An instruction manual outlining the concept and technical aspect of a cryptocurrency