Thursday, 12 May 2016 04:05

Bitcoin/ Blockchain Tech Explained: What Is It?

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In the current banking system we're all enslaved to, we rely on a bunch of accountants and economists to look after our money. If they're careless we suffer bigtime. Gatekeepers and watchmen are important, especially with digital money. But they have way too much access. How do you get people to watch money without being able to play around with it? Well, blockchain.

Just imagine you lived in a village where everything, including you, was transparent and everyone in it was a nosy know-it-all that minded everyone else's business all the time! The only thing that was visible in this village was the spoons. You couldn't give your neighbor a spoon without everyone immediately knowing about it, they'd just see it floating midair to it's destination. No one knows your identity as the spoon giver and no one knows who you gave it to but they can see the transfer clearly. Because there's a fixed number of spoons in the village allowed, you can't give out all your spoons and decide to make more, and no one has the power to freeze your spoon drawer because it's a decentralized spoon economy with no middleman in charge of all the spoons. All you have is nosy watchers who get paid to watch what you do with your spoons.

In this system, you can give out your spoons to whomever, however you like without worrying about crazy costs or the breach of your privacy because you're anonymous. Your house, where your spoon drawer lives, is the block. When you move your spoons from one house to another, you create a chain, hence blockchain. Miners are the people paid to watch how spoons move from one block to the other but no one can create or destroy the spoons. Someone can break in and steal all your spoons though if you're not careful and recovery is next to impossible.

As you've probably guessed, spoons in this analogy represent digital currencies, the most popular of which is Bitcoin. Other kinds of cryptocurrencies exist that rely on same concept of peer to peer networks as a decentralized means to review currency transfers via mathematical formulas.

So again, this is the oversimplified version. See my next few articles for a much more comprehensive look at how each component works. 

 

Read 550 times Last modified on Thursday, 26 May 2016 05:36

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