Before you run, you must walk...

Introduction

I was speaking to a friend about Hive and he was very interested, but as I described it in detail to him I saw his eyes "glaze over" and I knew I had lost him. Alas I realized I was moving to fast for him to grasp everything... I was in a sense running and he was still walking in terms of his understanding...

First walk, then run.

I remembered my favorite professor saying this to me time and time again. I wanted to do so many high level things when I first started studying decentralized finance. But my professor said, first you must understand the basics, then it will all make sense, otherwise you will become frustrated with all the steps you need to take. Honestly, I didn't believe him. But as my studies progressed it turned out that he was right.

First Concept: a blockchain is an ink ledger: no corrections.

On its most basic level, a blockchain is simply a record of transactions, something Fancy People call a ledger, but this ledger isn't written in pencil, so we can erase mistakes easily. No it is the scariest thing to accountants, an ink ledger, which means there can be no corrections!

I must admit that I am like most people and I am accustomed to recording things in erasable or correctable formats. Unfortunately, this ability to go back and correct mis-spellings or math errors can make us sloppy. We don't give things the attention they deserve to get it right the first time.

But the blockchain ledger is an ink ledger, what you write there, stays there. So if you get it wrong it's permanently wrong. Once you press send on a transaction and find out then that you made a mistake, it's to late to change it.

It's literally like the proverb says: It is to late to close the gate, when the horse has escaped the corral.

Example:

• You send Hive tokens to your friend John Smith.
• But in the to field you put John Smit.
• So...Your friend doesn't get the tokens.
• John Smit does.
• John Smit lives in another country. He gets the tokens, cashes them out, enjoys a meal at a Cafe thanks to you.
• You can't call the tokens back, and there is no one to call to make John Smit send back the tokens.
• You need to send your friend John Smith more tokens.
  This time paying attention to details like the correct spelling of his name.

Second Concept: there are no secrets on the blockchain.

The ledger is viewable by the public.

• Our regular banking transactions are known only to us, the bank and the person we pay.
• But on the blockchain, the ledger is viewable by everyone who can use a blockchain explorer.
• Anyone can look up transactions by transaction ID.
• It is like a Sequel or Excel database to give you a conceptual reference.
• The blockchain explorer lets you see all transactions if you know the transaction number in a few seconds.
• If you don't have the transaction number you can still find it if yu know other parameters like wallet address, date, time, and the exact number of tokens. Then you can find a transaction.
• It's an amazing tool, the Blockchain Explorer, which literally lets you see all the transactions on the blockchain.

I like to joke, so I use to joke in class that if you think you lost your tokens, they really aren't lost, we can track them on the blockchain, even if you send them to a place no longer under your control by your keys. They can be found. But no one may be able to move them, Ha HA Ha

That is called blockchain explorer humor. :)
Kind of like "gallows humor" , but with numbers and no blood.👍

Third Concept, Cryptocurrency tokens live on their own blockchain, and never leave.

• Yes, it is currently impossible to move them to other blockchains.
• The tokens are always on the blockchain, and are just being sent to different addresses.
• Think of them as mail or packages.
• When you put an address on the package or letter at the post office, you take your time to fulfill all requirements. And you take one last look at it before you pop it in the mail box.
• It is a similar concept when you are sending tokens to an address.

But the tokens are more limited than mail, which can go by plane, train, automobile or be carried by hand or on a horse!

• Blockchain only travel electronically.
• Tokens can only go to addresses on the blockchain.
• Even your wallet on an exchange is an address on the blockchain.
• If you accidentally put the wrong address it goes to the wrong address, but once you press send you can't get it back by yourself.
• They go there.
• Hopefully that location is on the blockchain. If you send it to an address which isn't on the blockchain they leave your wallet and go somewhere not controlled by anyones keys and essentially become unrecoverable.
• They are Lost in a sense, we know where they went, they went to the address you sent them to, and we can see it on the block explorer, but we don't have the keys to control that location, so we can't move them.

This is a hard concept to understand at first.

• When the tokens are in your wallet, you can move them because you have the code the blockchain requires to move them.
• The code is called your private keys.
• And it only controls tokens in your wallet.
• By inputting it you can move them.
• You must be careful to only move them to places you control with another code, or you are giving control of them to someone else.

For example, when you buy something, you use your code or private keys to move the tokens from your wallet to someone else's wallet. Once the tokens are there, only the person with the code to control the tokens in that location or private keys can move them.

*I know of a business which tries to recover Ether sent to the wrong blockchain. They have had some success, but I think it's very limited, to dead public addresses, a concept I barely understand, so I am unable to explain.

This basic fact, is often obscured by the words we use in decentralized finance like wrapped, swapped, or other synonyms.

Your tokens never leave the blockchain. They can be sent to a swap wallet, were they are held by a third party, who then gives you an equal value of another blockchains tokens, so you can transact value there.

I know that for some of you this is difficult to swallow. You may even think that we send tokens to other blockchains all the time. In actuality you are sending your tokens to a wallet on the same blockchain, monitored by someone or some code, which gives you an equivalent value token on the other blockchain.

Let's look at an example: Hive.engine

You send Hive to Hive.engine right? Wrong.
When you get to Hive.engine you don't have Hive in your wallet, you have Swap.Hive. This Swap.Hive token which represents the value of Hive on the Side chain called Hive-Engine.

It represents the value, but it is not Hive. Hive only lives one place, on the Hive Blockchain or in Hive Wallets, which are actually addresses on the Hive Blockchain.

If you understand these things, you understand all the processes involved in cross blockchain trading.

Thats why when we trade tokens on the Binance Smart Chain, we go through a Bridge on Binance Exchange. We are really sending them to a wallet there, and we are being given tokens of an equivalent value on the Binance Smart Chain. Thats why Bitcoin on Binance Smart chain is called BBTC. Because it's not Bitcoin, it is a token possessing the value of Bitcoin on the Binance Smart Chain.

Summary

Thats three core principles about the blockchain that are a walking level understanding. Once you understand them, you are ready to start running.

#Bon Chance! #Good Luck!

@defigeek

This picture is about the blockchain, and how it connects us all.