BitPinas. The technology behind bitcoin and many other cryptocurrencies – the blockchain.
Table of Contents.
What is Blockchain?
Let us help you understand blockchain by trying to put it in an analogy.
Blockchain is a digital ledger.
Think of like Google Spreadsheet where you collaborate with others. This spreadsheet is open to people (called nodes.). Since they are all in the same Google Spreadsheet, they can see all the changes and transactions at the same time in real time.
So what do they see in the “spreadsheet”? Records of transactions which form blocks. Each block has a record of transactions. In the BTC blockchain, one block can hold 1 MB or around 2,020 transactions.
Since the “spreadsheet” is open to a lot of “nodes”, no single person can own it. Also, if one of the nodes goes down, the blockchain stays. That’s very much unlike other applications with a central server. If the central server goes down, so does everything else. Not with the blockchain. It will live even if one the nodes goes down.
Because of this, blockchain is completely transparent and is incorruptible.
The first blockchain ever created was by an anonymous person or group named Satoshi Nakamoto in 2008. It was later on implemented as a core in the Bitcoin cryptocurrency. (Read More: What is Bitcoin?)
What is a Node?
A node is a computer connected to the blockchain network. Once they voluntarily enters the network, they automatically get a copy of a blockchain which they need to validate and relay the transactions. They will need to solve complicated puzzles based on computation that will earn them Bitcoins.
This is where the phrase “mining for Bitcoins” gets in.
Blockchain and its Private and Public Keys
Let us make Coins.ph as an example.
If you happen to have Coins.ph app in your mobile phone and wants to receive BTC from another BTC user, you will need to share your address. You can see this long and random mix of numbers and letters by going to your BTC wallet and tapping on receive. This jumbled numbers and letters in your address is your Public Key. All your Bitcoin transactions that get recorded in the blockchain belongs to that address. Your Private Key gives you access to your BTC and other digital assets in your address. (although it is important to note that Coins.ph does not give you your private key).
It is highly recommended to keep your Private Key/s safe. (Read More: What are Private and Public Keys in a Bitcoin Wallet?)
- Blockchain is a digital ledger. It is a compilation of digital transactions that occupy a block. These transactions needs to be validated and relayed by nodes.
- Nodes enter the blockchain voluntarily and earn incentives by participating in the network.
- Public Key is your address where all your transactions are recorded in the blockchain and belongs to it.
- Private Key gives you access to what’s inside your “address”.
Blockchain and Bitcoin gave birth to a lot of cryptocurrencies in rotation today. Some cryptos aim to make an even better network and some don’t even use the Blockchain but a different system. Blockchain may be too technical to some but just think of it as a general ledger of transactions that “nodes” have access to, for them to validate and relay.