A short and full course on money, blockchain, Bitcoin, mining and more

1. WHAT IS BLOCKCHAIN?

As you see, trusting a third party is not the best course of action. The cure for this cursed model is a technology called the blockchain. Blockchain – a persistent, transparent, public, append-only distributed decentralized digital ledger within a peer-to-peer network that creates trust in the data.

Translation into anti-nerd: Blockchain is a digital book, which records transactions that are hard to change after they have been added; the book can be seen by anyone anywhere; anyone can have a copy of that book; there is no third-party or middleman, like banks, Amazon, eBay, Alibaba, etc. Only the sender and the receiver. It is the underlying technology that powers cryptocurrency. It can also be programmed to record and track anything of value (land titles, medical records, etc.).

Excluding the middlemen from the equation is good because they create several problems:

• Loss of trust
• Billions of people get excluded from the global economy
• Slow system
• High fees
• No privacy

1. WHAT IS CRYPTOCURRENCY?

Cryptocurrencies are like regular currencies, except they are entirely digital and use cryptography for security. The difference between cryptocurrency and blockchain is that cryptocurrency is like US dollars (to check the price, you can visit https://coinepo.com/convert/btc), while blockchain is like the Federal Bank of the US. The other difference is that the cryptocurrencies (not only the BTC) can be used from all countries without any restrictions (United Kingdom, EU, Philippines (SLP TO PHP, as an example), and so on).

1. HISTORY OF BLOCKCHAIN AND BITCOIN

Blockchain was first introduced in 1991 by Stuart Haber and W. Scott Stornetta to prevent tampering with document time stamps. It was adapted on the 3^rd of January 2009 with the launch of Bitcoin by Satoshi Nakamoto. Nobody knows who he is or who they are.

2.3 ANOMYTITY OF SATOSHI NAKOMOTO

The reason why Satoshi Nakamoto chose to stay anonymous is this. A long time ago there was Gold & Silver Reserve Inc. which operated a digital gold currency called e-gold. It was founded in 1996 by oncologist Douglas Jackson and attorney Barry Downey. The idea was kind of similar to Bitcoin: an encrypted anonymous digital currency that is backed by a fixed supply of $71 million worth of gold; users can make instant transfers as small as 0.0001 gram of gold. At its peak in 2006 e-gold was processing more than $2 billion worth of transactions per year. The problem was that it was run by a corporation, which was formed in the Caribbean. It had hacks associated with it, frauds. In the end, the government took action.  e-gold pleads guilty to money laundering and illegal money transmitting charges. In 2008 the company was shut down.

• TYPES OF BLOCKCHAIN

Public Blockchain

• Permissionless, anyone is allowed to join
• Completely decentralized, all nodes have equal rights
• Transactions are anonymous but transparent to everyone
• Slow transactions
• More secure

Private Blockchain

• Permissioned, only specific parties can become a node, no anonymity
• Partially decentralized, a single organization as a central authority
• Faster transactions
• Less secure

Consortium Blockchain

• Same as the private blockchain, but has multiple organizations, instead of 1
• Faster than Private Blockchain
• More secure than Private Blockchain
• More decentralized than Private Blockchain

Hybrid Blockchain

• Combination of Public and Private Blockchains
• Some data are public for the nodes, some are private and can be seen only by the central authority

There is not only one blockchain, there are many. What we will discuss here is the Bitcoin’s Blockchain. In future articles, we will examine other ones, like Ethereum’s, Ripple’s, etc.

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