blockchain explained
March 7, 2018
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James Erskine
What is Blockchain?
If you are wondering what blockchain is you have came to the right place. “Satoshi Nakamoto” is the anonymous creator of “Bitcoin”, with Bitcoin he released how it would work. This was called “Block chain Technology”. Blockchain Technology is how the digital coin is able to be transmitted from one computer to another. Blockchain allows multiple computers to agree or disagree on the state of a distributed ledger. Let me guess you are wondering what the heck does that mean? Well simplified think of blockchain like an excel spreadsheet with multiple transactions being recorded every day. There is rules that are enforced inside the excel spreadsheet that dictate what happens to recorded data involving “Bitcoin”. According to MIT Sloan Assistant Professor Christian Catalini, “Ledgers can contain different types of shared data such as , attributes of transactions, transaction records, credentials, or other pieces of information.
This digital ledger known as “blockchain, uses cryptography to secure the blockchain. The definition of cryptography according to “Webster’s” is
“The enciphering and deciphering of messages in secret code or cipher; also : the computerized encoding and decoding of information.”
The ledger is often secured through a clever mix of cryptography and game theory, and does not require trusted nodes like traditional networks.
So in order for blockchain to work the way that it does today, multiple replicas of the ledger are installed on individuals computers using blockchain to record data, digital rights, intellectual property and identity are a few examples of what is stored on these constantly updated ecosystem we call “blockchain technology”.
The computers involved in the updating of information is what is considered the foundation of the blockchain and is what symbolizes chain links that keep everything secure. Once data has become inputted into the ledger it is always existent there.
This is what allows Bitcoin to transfer value. On a blockchain, transactions are recorded chronologically, forming an immutable chain which is distributed across many participants inside the network.
How is blockchain related to bitcoin?
Bitcoin, with a market capitalization of $182.887 Billion as of March 2018. Bitcoin is the largest implementation of blockchain technology to date.
The fascinating aspect of this technology is obviously the foundation “Bitcoin” is built on, “blockchain”.
One example that individuals and professionals alike are interested in this technology is the financing industry.
The ability to settle transactions globally is revolutionary. The Banking Industry is already dabbling in this technology. Cryptocurrency “Ripple” has a market capitalization of $36 Billion. “Ripple” is a cryptocurrency that Banks are backed by and is the only unique cryptocurrency that is not decentralized. Ripple does intend to become decentralized in the future. “Ripple” basically has an escrow account with “Ripple” coins on hand in their account. A user will then use a similar blockchain explained above to submit an IOU to another party. The funds then are transmitted to the blockchain and the escrow account distributes the funds. This is a very simplified version of what goes on involving this particular coin “Ripple”. This is one instance of blockchain technology being brought to the financial sector.
Industries that Blockchain Technology could certainly disrupt?
“All of them,” Catalini says. “The technology is what economists call a general purpose technology.
Clean-SL8 intends to bring blockchain technology to the Self improvement industry. SL8 coin is positioned to incentivize personal growth and achievements by creating a platform that allows individuals to get paid in the form of a tip for their life experiences.
Their Pre Initial Coin Offering was recently pushed back due to preparing the project with enough runway to pursue their project positively.
“Ethereum” brings smart contracts to blockchain technology. This allows individuals to build on top of their platform. “Ethereum” has become a well known cryptocurrency and was created by Vitalik Buterin.
Explanation of what a fork is in cryptocurrency.
“Ubiq” is a fork of Ethereum. A hard fork is generated when the developers of a particular coin decided that an update is needed to perform in their coding of their blockchain. For instance Ubiq was a hard fork off of Ethereum and Clean-SL8 is a hard fork off of Monero coin.
Changes must be made to the versions of the ledger which results in these hard forks. Forks cause a lot of emotion to surface in the cryptocurrency community. This because when a fork occurs, only one form of the ledger code can exist at one time. Often during a fork the particular coin that is being forked will have a decline in price but it can also be interpreted as a perfect buying opportunity.
Explanation of what an Initial Coin Offering is or I.C.O.
Cryptocurrency has been hit with a boom when it comes to launching new project in 2018. When a cryptocurrency begins a new project they are able to create a ICO. This is an attempt to fund the project further. Since cryptocurrencies are unpredictable and extremely volatile, having proper capital is essential to keep a project from capsizing.
An ICO is an unregulated version of crowdfunding. This is similar to an IPO initial public offering like a venture capitalist bank would required to perform. The difference is that an ICO allows this form of capital raising in an unregulated manner. ICO’s have become very lucrative to investors. Some ICO investments have given returns of over %2,000 if you purchased them from the beginning. Statistically, Initial Coin Offering project mainly fail about %80 of the time. This makes a lot of these projects a crap shoot. If you can find the right project that are available and have potential you can easily see these %2,000 gains over the span of the project. Once a project is launched and has an actual product is usually the instance you will see a return on your investment. Cryptocurrency is by far hands down the number one investment to partake in 2018. There is no other investment that currently holds the possible returns like ICO’s do. Remember to do your own research. This is not financial advice and you should always do your own due diligence.
What is an Altcoin?
An Altcoin is any coin that is not Bitcoin.
Altcoins use their own form of blockchain and requires their own system to support their currency. Altcoin is an abbreviated version of alternative coin other than Bitcoin.
Cryptocurrency Mining
In order for all of this cryptocurrency industry to work there must be a way for all these transactions to work. This is where mining comes in. Computers need special programs that allow users to link up with each other. They are then setting up a competition to compete with one another in the race to solve mathematical algorithms. In intervals, each user will try to solve these problems that these transactions are embedded within the code in which these user or miners are in competition to solve. Once a problem is solved it is called a block. This block is considered found after verification. Who ever solves the problem to find the block is rewarded in the form of a block reward. Usually these computer mathematical problems are too complex to complete on your own and require a pool to generate enough hash power to solve the problems effectively. Hash is a numeric value fixed to identify the data.
The expert
“Christian Catalini is the Fred Kayne (1960) Career Development Professor of Entrepreneurship, and Assistant Professor of Technological Innovation, Entrepreneurship, and Strategic Management at MIT Sloan. He is an expert in blockchain technology and cryptocurrencies, He is one of the principal investigators of the MIT Digital Currency Study, which gave all MIT undergraduate students access to bitcoin in Fall 2014. He is also part of the MIT Initiative on the Digital Economy.
His work has been featured in N
ature, the New York Times, the Wall Street Journal, the Economist, NPR, Forbes, WIRED, Bloomberg and many more.”
