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- Bitcoin the first Blockchain
- 03/Jan/2009 - First time Bitcoin started.
- Response to how people in the financial industry mismanaged wealth.
- Typical attributes of currency:
- scarce
- durable
- divisible
- portable
- verifiable
- fungible
- Added attributes of cryptocurrency:
- inimitable - cannot be duplicated
- decentralised - there is no single institution or country controlling the currency
- digital
- Cryptocurrency Value = Belief in the utility of the Blockchain network; will automate a lot of what banks do
- What are blockchains?
- Are the memory of the Internet.
- Made of computers, instead of neurons, spread out all over the world.
- Gives Internet access to data to access critical functions.
- Does not need to go to the bank; can safely send records to specialists without that data being falsified.
- Gives the Internet access to data in order to execute critical functions and not rely on external sources of information.
- Bitcoin - databases owned by banks.
- A blockchain network is a type of distributed network. It also refers to the structure data is stored in.
- How Blockchains work (simplified technical explanation)
- A user needs two basic things:
- A private key and a public key
- A private key is like a password
- A public key (aka address) is like a phone number
- if you lose the private and public key, you'll lose access to your blockchain.
- It is difficult to hack, so unlikely able to retrieve the data (e.g. this is how people have lost their bitcoin)
- A private key and a public key
- Basics components of a block
- Example: bitcoin blockchain
- A Hash is a condensed form of a digital file of anything
- A function that, when data is run through it, will produce an identical (and often unique) result for the same given input
- Merkle Tree, Merkle Root Hash
- Component 1: Transaction Hash + Component 2: Previous Block Hash + Compotnent 3: Random number = Block Hash #
- Change one block it would change the history of the rest of the Blockchain, because it would affect all hashes down the line.
- Data security is maintained by having a copy of the blockchain
- If a node would have a faulty copy of the blockchain, the other nodes (the network) would just ignore it
- Who gets to be a node and what is the incentive?
- anyone can be a node
- the more computers there are the harder it is to come up with the NONCE
- the NONCE is a method to build new blocks
- only one node has the right to write the next block
- the first node to "guess" the NONCE, gets to write the next block
- Mining is volunteering for the network for the intention of winning the reward (NONCE – a hash result).
- in terms of bitcoin, the node that writes the next block receives 12 bitcoins.
- A user needs two basic things:
- Implications in the world at large
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