TL;DR: In this series, we will talk about everything from blockchain basics to building a complex . DAPP What is FIAT? 💰 The standard currency is called FIAT. FIAT requires a middle man authority (a bank or a government as examples). A cryptocurrency in some technology (like blockchain) relies on automatic rules to comply with the exchange rules. The most widely used digital currencies are . cryptocurrencies We call them because it relies on properties similar to password encryption. crypto mathematical cryptographic We cannot trust other people around without a middle man. We use cryptography to exchange value in the same way we use to send sensitive data over the internet. https Hashes ➗ We have been using for a long time in computer science. math hashes take an input and produce a deterministic output. Hash functions We use hashes on databases, algorithms, and data structures. A good hash function is easy to calculate on the input, but very hard (in computer time) to reverse from the output. Multiplying two integers is a very fast operation. into its prime factors is a very expensive operation (provided factors are large enough). Factoring an integer We can transform any data on blockchain into numbers and encrypt them very fast. If we chain a block content, its hash changes unless they have the same hash. We called this a and can keep its probability near zero using math. hash collision The Blockchain ⛓️ What is a blockchain? 🔗 Blockchain is about decentralized trust. You exchange value without an intermediate. Trust issues are not solved by a middle man like a market, broker, credit card, or bank. You don't trust or rely on reputation or a certified third party. Standard middlemen are expensive, slow, and human errors prone. Blockchain was first designed to exchange currency. Nowadays it has many other uses such as managing loans, supporting all kinds of contracts, NFTs, Tokens, etc. Which was the first blockchain? 🥇 (a collective or fake alias) released the . Satoshi Nakamoto First Blockchain proposition Bitcoin was the first blockchain implementation. Blockchain technology was first designed for digital currency exchange. Blockchain secures transactions in a not-trusted medium (the internet). Blockchain Properties 🌟 Transparency. Decentralize trust and carry on distributed transactions and electronic commerce. Remove man in the middle, merchant accounts, banks, clearing services. Reduce charges and improve efficiency by removing the middle man. Full and transactions history. auditability No single point of failure. We replicate the database in many places. Most blockchains are public, tough transactions might be encrypted. Blockchain Implementation 🔧 How does it work? 🎰 All new data is added, never removed, or replaced. Blockchains are immutable databases on transactions. Most traditional databases (relational, files, hierarchical, spreadsheet) can be overwritten. Blockchain only allows CREATE and READ, No UPDATE or DELETE. It is not a traditional . CRUD How do we store data? 💾 To update a change, we need to add a new transaction at the end. This is analogous to . account ledgers Every Block has a group of transactions with (possible) different partners. Blocks are chained like a . linked list Since blockchain is immutable; stored data is available forever. Blocks are replicated in nodes. Nodes are replicated all over the net. If we want to add new data, we need to reach a consensus. All nodes have the same authority and a single vote. We reach a once one of them gets (50% + 1) votes. Consensus A Transaction can be anything as long as we can store it with bytes. To transfer cryptocurrency we will add to the ledger a Transaction for an amount with source a destination addresses. The chain 🔐 Genesis Block is block 0 Next block stores the previous block's hash as a linked list. The hash guarantees chain is neither broken nor faked The Nonce 🔑 To make hash computation hard we need to introduce some random data with the transaction. We force the hash value of the transactions + the fake data to have an arbitrary form. We ask the computed hash function to have some leading zeroes. At Bitcoin, . there are currently 19 zeroes The random data is called a Nonce. We need a nonce such as, together with the valid transactions, it yields a hash with some leading zeroes. It is very costly to search for this nonce. Bitcoin uses leading zeroes. Other blockchain implementations use similar mechanisms. Mining 🏭 What is mining? 👨‍🏭 Mining is the artificial process to find the proper Nonce to add to a group of transactions to achieve a hash with a fixed number of leading zeroes. takes a lot of computational time and energy. Mining Miners use specialized hardware where energy is cheap all over the world. Nowadays, Mining is a threat to the environment. Nodes compete for the price provided it is valuable. The first one who solves the math puzzle gets the reward. After global validation, new Bitcoins (or equivalent) are rewarded to the one who solves the puzzle. Global validation is easy since hash encoding is cheap as opposed to hash decoding (mining). The reward motivates miners to legitimize and monitor Blockchain transactions, ensuring their validity. Integrity and Trust 💱 Blocks are added after consensus. If 50% +1 agree to fake a chain, they can do it. This is known as the 51 % Attack is the most used mechanism and it consists of global hash validation. Proof of work requires less computer power than Proof of work. it uses bet voting to select a winner. Proof of Stake Currently, there are no efficient ways to carry on Proof of Stake in a decentralized way. There are several other alternatives. Voilá.
This is basic Blockchain.
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Bite-Sized Blockchain Guides Part 1: What is a Blockchain?

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