So I started this blog on Publishox and would love to get your feedback on it guys!
Hello world! and welcome to my first post in this Blog.
At first I’d like to say that this post is not for you, crypto aficionado, who’s been on this market for x years, I’m not saying that you shouldn’t read it but my idea is to talk to the newcomers, the people who now are first hearing about crypto and are interested in this amazing technology that once again is hitting the news all around the world.
The first thing I`d like to say is that I by no means am a complete expert in this field, I have of course deeply studied it for 3 years and believe I have enough Knowledge to share. I am however, open to discussions on somethings that may not be entirely true in my explanation, but please understand that I am going to go through a lot of metaphors and some of them may not completely grasp all the details that are in the technology behind cryptocurrencies and that`s OK! remember that my main idea is to get new people hooked and for them to start understanding the basic and then going further on their studies.
lets begin shall we?
## What are cryptocurrencies?
>*according to wikipedia:*
*”A* ***cryptocurrency****,* ***crypto currency*** *or* ***crypto*** *is a* digital *asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. It typically does not exist in physical form (like paper money) and is typically not issued by a central authority. Cryptocurrencies typically use decentralized control as opposed to centralized digital currency and central banking systems. When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database”*
Wowowow, that a lot of confusing words and most of you probably didn’t understand a thing, But that’s why I’m here! so lets break it down to some things:
“*a cryptocurrency is a digital asset”*
Being so it doesn’t exist in a physical form, so coins with a bitcoin picture doesn’t mean anything.
“*designed to work as a medium of exchange”*
So the idea behind it is simply to exchange things, like we exchange dollars for food right? crypto was designed to be the same thing: a way to exchange one thing for another.
*”records are stored in a ledger”*
If you don’t already know, a ledger is basically an accounting book a way to register transactions.
*”using strong cryptography to secure transaction records”*
It must be cryptographic for it to work, crypto (as the name implies) must be unhackable in it’s pure form. oh oh oh BUT A LOT OF EXCHANGES WERE HACKED IN THE PAST! yes they were, but not the technology, so we’ll get there.
This one is important! crypto is mostly controlled by NO ONE! (or rather everyone) so different from coins in candy crush in which the developer has full control of it and can add and delete any coins from any person at any time or like your bank who can freeze your account if it suspects you are doing something illegal, no one can do that to crypto, no matter what you do, your wallet is completely safe as long as you have the keys and no one else does.
And this last sentence brings to my first topic of conversation that is the
So what is this blockchain that I keep hearing about?
But who is Satoshi is not important right now, what is important is what he has done.
Back in 2007 there was a lot of debate on the cryptography world on how to solve the Double-spending problem, that is, if we were to create a totally digital coin, how could this coin be safe from being duplicated or used more then once? A dollar is a dollar and it is impossible for you to use the same dollar bill 2 times but a digital coin? a hacker could just get a way to replicate and he would be rich!
Well in 2008 Satoshi published a paper called: “Bitcoin: A Peer-to-Peer Electronic Cash System” and at first he was ridiculed, a lot of people didn’t believe in the idea back then and most of the comments were pretty negative.
However as we now know they were wrong!
Satoshi‘s idea was to create a ledger(accounting book) that was completely open for anyone to see, that anyone could add a transaction to it and that it would cost a fee to do so, but to make sure that this transaction was true (as in the person sending a coin actually had the coin and the coin had actually left his wallet to his recipient wallet) we need a peer-to-peer system called proof-of-work.
Back to being complicated right? so lets think metaphorically:
The blockchain is a big book, infinite if you will, everyone in the world can see it and can actually download its entirety as they wish, the people who keep the blockchain online are called “**nodes**”, for the blockchain to be safe from not existing we need a lot of nodes, so to incentivise people to be a node he created a reward system.
Now imagine that in this first book called “**bitcoin blockchain**” there is only one information people can write and that is a transfer of this thing called bitcoin to one person to another. at first no one had any bitcoins since it was a newly created thing so they needed people to get those bitcoins and start trading. after all remember that is all we can do in this book, so what he did was he put coins inside each page (block), but he didn’t want bitcoin to be unlimited so he created a maximum amount of bitcoins that will ever be created **21 Million**. there will never me more then 21 million bitcoin in existence and since he decided to put some on every single page of this book the last bitcoin will be receive on page (block): **6,929,999** a new page is turned every 10 minutes so that gives us the theoretical date of **2140.**
Well, when Satoshi opened the book he found the first 50 bitcoin in existence and three days he decided to send 10 of those to his friend Hal Finney, making the first oficial bitcoin transaction to be written on this book.
So as I said, every page has some bitcoin, at the beginning every page had 50 bitcoin but to be able to turn that page you would have to solve a puzzle and since there is only ONE blockchain, whoever solved the puzzle first gets to turn that page and receive the reward and all the fees for the transactions written on it.
So it was simple, if I want bitcoin I need to solve a complex puzzle, but it isn’t a puzzle that one can do with a paper and a pen, it is a complex puzzle that only computers can solve, and this puzzle keeps getting harder and harder the more pages have turned, so you would have to devote **computer power and electricity** in exchange for getting those pesky bitcoins. we call these people who do this **miners** and miners are nodes as well.
Ok cool so I am a miner all I have to do is to solve this puzzle? yes and no, by doing this you are confirming that the transactions that are written on that page are actually correct, so since you are a node you have access to the whole book right? so you can see that Satoshi has 50 BTC since he received when he first opened the book, and you can see that Hal has 10 BTC since Satoshi gave him some so now we have the certainty that Satoshi has 40 BTC and Hal has 10 BTC. so as you can see, if we inspect the book we can find out EVERY SINGLE TRANSACTION so if you have an **address** you can see how much BTC that person has at any time and who he sent to whom. therefore **EVERY SINGLE BITCOIN EXISTS ONLY IN THE BLOCKCHAIN**.
But how about wallets? I have a wallet and my bitcoin is in there!
NO IT’S NOT.
A wallet does not contain in itself a Bitcoin what it does contain is your **PRIVATE KEYS.** Private keys are in the book metaphor a single pen that only you can use, this pen is the only thing that can write in your name, so only Satoshi has the pen that can send his BTC to Hal. and this is why your private keys are the single most important think to have completely safe. if someone finds your keys they can write in the book in your name.
But to be able to receive BTC your friend needs to know where to send to and this is where we have our **PUBLIC ADDRESS.** A public address in your name in the blockchain, since writing names are obviously impossible since there are millions of people in the world that have the same name, instead of your name you have a very big sequence of letters and numbers that represent YOU.
## So to recapitule:
Satoshi received 50 BTC from opening the book (genesis block), he got Hal’s PUBLIC ADDRESS and used his PEN (Private keys) to confirm that his public address was sending 10 BTC to Hal’s public address and paid a small fee to do so. **Miners** who want to get rewards (block rewards and fees), confirmed that that transaction was written on the book (blockchain) and as soon as the page (block) was turned that transaction was publicly there forever.
Nowadays rewards are not 50 btc per page turned and a simple computer cannot solve those puzzles anymore, so minning is basically left for those who can afford a lot of equipment.
The blockchain technology opened up the door to a million other applications that I plan on talking about in the future, but it is revolutionary as is, it can make sure that double spending is not going to happen and that no single entity can control or change it’s content.
As long as there are Nodes and miners there will be the blockchain and I don’t see this ending anytime soon.
there are a lot more information that I’d like to share but I’m going to leave for my next post so feel free to ask me anything or to correct something that might make my text more complete! If you like my text and want to contribute to make me write some more, i’d really appreciate any donations.
ETH (OR OTHER ERC20 TOKENS)
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ALSO if you’d like to check my publishox account (and maybe tip me there to help me keep writing) this is the link: