A blockchain is a digital ledger that records transactions across multiple computers called nodes. The chain is made up of blocks that contain batches of transactions, linked together in order. This forms a chain of blocks. And the previous block hash is also stored encrypted hash on the block. The block contains:
- Version
- Previous block hash
- Hash Merkle root
- Time
- Bits
- Nonce
Blockchains have several benefits, including: Security, Transparency, Immutability. Unlike Traditional Finance where everything is done behind closed doors or under the table. Blockchain is in the open/public, and handled by mutual agreed contracts (The exceptions are private chains where there is still a known mutual contract, but data is unseen; or things like CDBCs where it can be completely controlled/manipulated and behind closed doors by the managers of the CDBC). The term Blockchain can be used for open and decentralized or for closed, controlled and hidden blockchains like CDBC’s. As with anything, a blockchain can be used for good or evil, the same as a car, or spoon. The vast majority of Blockchain has been used for research, learning and freedom of people. There has been issues with scammers, rug pull chains, pump-and-dumps, just like we see in stocks, used cars, insurance, banks. (Like the Centralized Bank one of the pillars of communism, the Federal Reserve [members selected by banks], that print money and give it to the banks. The Federal reserve has devalued the dollar by over 90% since the 1970s when they took the US off the gold standard). Or that the banks are the VAST majority of money laundering, fraud). Remember that when the “tools” in congress or the banks or politicians talk negatively about Cryptocurrency, they either are knowing lying or did not do basic level of research, either way highly dishonest. Cryptocurrency is about freedom for the people, and they want to keep the ‘status quo’ of control and even more control with CDBC’s.
Decentralized Blockchains:
Decentralized Blockchains are about Freedom, Security, Trust-less, Immutable (ideally changeable), open ledger (record of account) that is open, fair, and allows anyone to watch or confirm. No person, government, corporation/bank controls the chain, instead hundreds to thousands of machines check the blocks and confirm the transactions.
There are many Blockchains:
There are hundreds of blockchains and there are at least 10’s of thousands of Cryptocurrencies. For terms coins are the native unit on the primary chain and tokens are guest cryptocurrencies on a given blockchain. There are also many types of blockchains in how they maintain their security. For a few examples:
- Bitcoin – is proof of work – where miners need to validate transactions through mathematical proofs, and there needs to be consensus between multiple distributed nodes.
- Ethereum – is proof of stake, where the nodes have coins staked and can have loose staked coins for incorrect or improper activity. They also go through the transactions and verify, and need to be verified by multiple nodes.
- Others are Proof of Reserve, Proof of History, Proof of Space/Capacity, Proof of Identity, Delegated Proof of Stake, Proof of Validation, Proof of Activity, Proof of Authority, Proof of Activity, etc.
Please do realize there are other options. Like a BlockDAG which is used by Kaspa.