Are you considering investing in VeChain? Then it might be a good idea to familiarize…
When working with different forms of digital currency, you have to familiarize yourself with a number of concepts. One of them is the term blockchain .
Blockchain is Norwegian for the English term blockchain , which some may prefer to use. However, the term blockchain is just as common in this country. But that’s how it works – you try to find a Norwegian translation, and in this case it has been accepted.
If you are relatively new to the game, then it is not certain that you have complete control over exactly what a blockchain is yet. But it is a type of technology on which many digital currencies are based. By digital currency we mean, for example, cryptocurrency.
Below we will take a closer look at this technology, and answer some important questions that often arise in connection with this. What exactly is a blockchain, and how does it really work?
What is a blockchain?
As mentioned, blockchain is a term that is often used in connection with cryptocurrency. And that is also what will be the starting point for this article.
Blockchain is a type of technology that makes up many of the most popular cryptocurrencies. The cryptocurrencies Bitcoin and Ether are some good examples of this. But what exactly is blockchain technology?
How to buy Bitcoin .
Blockchain technology can be compared to virtual boxes that allow people to store necessary information. The information is then used to record, track and make visible information about all transactions that are made digitally. It’s a kind of account book.
The different blocks in the block chain are connected to each other thanks to cryptography. This is a practical technique that allows developers to hide information they do not want others to have access to. And only a few have access to the key.
The history of blockchain technology
The history of blockchain technology goes back several decades. The very first time this technology was mentioned was in 1982. And since we are in 2021 at the time of writing, this means that this is a technology that is almost 40 years old.
But despite the fact that there were some who started researching it as early as 1982, that does not mean that it became a natural part of the industry right away. In fact, it took a full 9 years before it happened. It was not until 1991 that the proposal to use blockchain technology came up.
However, it would be a few more years before the proposal was put into practice. This did not happen until 2008, when Bitcoin was launched . Bitcoin is a cryptocurrency that is familiar to most people, as this is one of the most popular cryptocurrencies we have in 2021.
In 2021, the use of blockchain technology can almost be described as normal in connection with the development of cryptocurrency. The reason for this is that the vast majority of cryptocurrencies that we have as of today are built up precisely by blog chain technology.
This is how blockchain technology works
Now we have determined what a blockchain is, and what this technology has been through until today. But how does this technology really work now?
New blocks are generated all the time
It goes without saying that the block chain is dependent on new blocks being constantly added to the chain, for the chain to continue. If it does not happen, then it goes without saying that this is something that stops, and then there is nothing more to build on.
However, this is not the case with blockchain technology. Here, new blocks are generated all the time. How this takes place has a connection with which protocol is the starting point for the relevant blockchain.
Generating a new block is a time consuming process, and it is the protocol that determines how long it takes. In some cases it takes only a few seconds to generate a new block, while other times it may take several minutes.
It can be said that there is a request to add a new block to the block chain that already exists. This request consists of a series of steps, and they are as follows:
The network receives the request to generate a new block for the blockchain. The new block is generated through the execution of a transaction.
The transaction is verified by a node that is available at the current time. Then the node has to compete with other nodes, to get “its” block added to the block chain.
The competition is about presenting the block that can solve a problem that the network has been facing lately. Once the network has determined which of the relevant blocks they need, the transaction is confirmed. The node also receives recognition for its work.
When the transaction is confirmed, the block is added to the existing block chain.
Each new block has its own hashes
But what is it about the new block that makes it possible for the network to check that it is the right block for the existing blockchain?
It can be a bit difficult, but this process is mostly about the nodes having to come to an agreement. In other words, they have to look at the relevant blocks and agree on which one to include in the block chain.
Cryptomining – this is how it works .
In connection with this, the new blocks’ hashs play an important role. Hash can be compared to a fingerprint. In other words, all the new blocks have their own fingerprint, and the nodes examine these to find which one fits best.
The hashs of the blocks do not only contain information about “themselves”. It also contains information that allows the nodes to trace it back to the previous block in the blockchain technology.
That is why blockchain technology is important
One of the characteristics of blockchain technology is that the technology is decentralized. In practice, this means that there is no third party involved in the process, as is the case with, for example, a traditional bank.
The banks are based on centralized technology
If you keep some value in a traditional bank, there is someone who sits and checks this at all times. In other words, the traditional banks are based on the opposite of blockchain technology – here the technology is centralized.
Most people grow up hearing that the centralized technology (ie a traditional player) is always the safest. But there is not really a guarantee of total safety here either. Traditional banks are still vulnerable to attacks such as hacking.
Most people take the bank’s word that your funds are stored in a safe place. And it’s not that we’re trying to say that’s not true. Our point is security and safety are relative concepts, and that it can be just as safe to store your funds with a decentralized player.
In connection with centralized actors, it can also be questioned how they use customers’ data.
Blockchain technology is decentralized
As is well known, the blockchains on which cryptocurrencies are based are decentralized. This simply means that the full responsibility does not lie with one actor. Instead, it lies with everyone who is part of the relevant blockchain.
In practice, this means that blockchain technology forms a separate network of people. In the technical language, one can use the term nodes about this. In other words, a node is one of the people who form this network.
Since a decentralized actor does not function in the same way as a centralized actor, another way must be found to make it a safe and secure system. This is done by linking the nodes together by cryptography.
The cryptography ensures that the nodes are able to communicate with each other, and this is what ensures that the blockchain technology is as secure as another player that is centralized.
This uses blockchain technology
As we have seen above, most cryptocurrencies today are based on blockchain technology. But does that mean that all cryptocurrencies are exactly alike? But the answer to this question is no.
Below we will take a closer look at the examples we mentioned above – Bitcoin and Ether – and find out how blockchain technology works for each of these.
Blockchain technology and Bitcoin
Today’s blockchain technology became part of the market when the launch of Bitcoin was a fact in 2008. The developer Satoshi Nakamoto was behind this launch. In connection with blockchain technology, he had taken as his starting point the idea that was launched in 1982.
In 2008 , the world was in a financial crisis , which means that Bitcoin was launched as we were on our way out of this crisis. At this time, confidence in the traditional banks was very weak, given the financial crisis. Therefore, this was the perfect time to launch Bitcoin.
At this time, Bitcoin was an alternative to the traditional means of payment. Confidence in the traditional banks was not the best either, and Satoshi Nakamoto used it to his advantage. Therefore, there were very many who wanted to try out Bitcoin.
It can therefore be said that the first use of blockchain technology was of a financial nature. To begin with, blockchain technology thus functioned as a kind of foundation for a payment system that was to be an alternative to the traditional banks.
When a financial crisis hits the economy, there is nowhere to hide – yes, perhaps outside of cryptocurrency.
Blockchain technology and Ether
A few years after Bitcoin was launched, a new concept emerged that built on the same blockchain technology. This concept was named Ethereum, which was both a cryptocurrency and a separate network that could be used for more than one payment system.
In this regard, it is important to distinguish between the cryptocurrency and the network. Today, the network is referred to as Ethereum, while they have chosen to shorten the name a bit when referring to the cryptocurrency. It has been named Ether .
How to buy Etherum .
The developer Vitalik Buterin was behind this launch. And what distinguishes the blockchain technology in Ether from the blockchain technology in Bitcoin, is that this blockchain technology also includes something called smart contracts.
It is the smart contracts that make it possible to use Ethereum as something more than just a means of payment. The smart contracts make it possible to create a number of decentralized applications, which have nothing to do with cryptocurrency.
Blockchain technology has great potential
Above, we have looked at some of what blockchain technology is used for as of today. In most cases, it is used for something that has a link to some form of digital currency. It is used, for example, in the cryptocurrencies Bitcoin and Ether.
The developer behind the cryptocurrency Ether has also used smart contracts in its source code, so he has also developed the Ethereum network that can be used to develop other types of applications.
Therefore, it can be said that blockchain technology is a type of technology that has very great potential. Although it is most common in connection with digital currency such as cryptocurrency, it does not mean that it is the only thing it can be used for.
Blockchain technology can be used to secure most values, so it will be exciting to follow how the future of blockchain technology will develop. After all, we live in a world that is constantly evolving in a number of areas!
How to develop cryptocurrency using blockchain technology
Are you one of those people who really lets you fascinate with blockchain technology? Maybe you even have a little entrepreneur in your stomach? Then you may want to try to develop something with the help of blockchain technology.
One of the simplest things you can develop based on blockchain technology is, not very surprisingly, cryptocurrency. By that we do not mean that it is as “easy” as, for example, breathing, this is something most people can instinctively do. But this is not the case with blockchain technology.
Mining – we show you where and how .
First, you need to familiarize yourself with how blockchain technology works in practice, and then this article is probably a good resource. Once you have figured it out, just go into more detail on how to develop cryptocurrency. And that is perhaps the simplest thing.
The reason it is “simple” is that most cryptocurrencies are based on open source. In other words, these are source codes that are open to everyone. In practice, this means that you can start from this, make the changes you want and launch it as a separate cryptocurrency!
One month ago it was announced that the creators of Axie Infinity, which is one…
Bitcoin has been accepted highly on other continents across the globe. However, most nations have…
The crypto universe is an ever-evolving universe. This has led to it being a bit…
Cryptocurrency took the world by storm in 2009. First out was Bitcoin, but this is…