{"id":2377,"date":"2023-12-21T11:35:26","date_gmt":"2023-12-21T09:35:26","guid":{"rendered":"https:\/\/www.digitalartists.com\/blog\/?p=2377"},"modified":"2023-12-21T11:43:21","modified_gmt":"2023-12-21T09:43:21","slug":"what-is-a-blockchain","status":"publish","type":"post","link":"https:\/\/www.digitalartists.com\/blog\/what-is-a-blockchain\/","title":{"rendered":"The Ultimate Guide to Blockchain Basics"},"content":{"rendered":"\n

We are in an age where the digital world is a big part of our daily routine. A place which includes our personal information, our hobbies and connections to people, and most importantly, our personal finances and transactions. There are new payment methods coming up constantly, with 23,000 cryptocurrencies recorded as of March 2023<\/strong>. And whilst those cryptocurrencies have been known to people for the last couple of years due to their increased hype, the system behind them has been in the works since 1991. The online space has been a much safer place since then. <\/p>\n\n\n\n

There are monumental historical cyberattacks which have targeted millions of devices and money throughout the world. Skillful hackers have been able to breach digital systems and leave a massive negative impact on different companies. Many people are still hesitant about the idea of owning intangible currency. Especially after the boom of cryptocurrencies, it\u2019s clear why there is a need for an unbreachable system to host them. It\u2019s a good thing that blockchains are renowned for their security and other benefits, which have <\/strong>been proven to work perfectly. Let’s get into answering the important question of what a blockchain is. <\/p>\n\n\n\n

What Is a Blockchain?<\/h2>\n\n\n\n

A blockchain is the smart, secure and decentralized system behind cryptocurrency transactions, similar to traditional ledgers, most often used in accounting, which are books for accounting transactions. These always record dates, types of transfers, amounts of transfer and the senders and receivers of the transfers<\/strong>. Hence why blockchains are called digital ledgers.  <\/p>\n\n\n\n

The idea for a blockchain was born to generate security around digital transactions and was first used with the Bitcoin blockchain. This was done in 2009, a year after unknown creator\/s called Satoshi Nakamoto created Bitcoin. This period marked the first Bitcoin transaction, when Nakamoto transferred 10 BTC to Hal Finney, who was an important person in Bitcoin\u2019s creation<\/strong>. This is a historical moment, creating concrete proof that future digital transactions have a secure and reliable system to be based on, bringing attention to the world about what a blockchain is and how it can change their businesses.<\/p>\n\n\n\n

How Do Blockchains Work?<\/h2>\n\n\n\n

The whole process of sending or receiving Bitcoins is made straightforward by apps that don\u2019t show how a blockchain works behind the scenes. Once the user requests the transaction to be made, the transaction is turned into a \u201cblock\u201d. Then, a whole operation runs through a worldwide blockchain network of connected computers, also known as nodes<\/strong>, which receive this block. This network is called a peer-to-peer (P2P) network, which basically allows the connected users to conduct and handle the transactions within the network, without needing a middleman. These computers then need to validate the transaction between each other through the Proof of Work (PoW) method.<\/p>\n\n\n\n

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What the Crypto Minting Process on a Blockchain Looks Like<\/figcaption><\/figure>\n<\/div>\n\n\n\n
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\"Crypto
What the Crypto Minting Process on a Blockchain Looks Like<\/figcaption><\/figure>\n<\/div>\n\n\n\n

This verification process includes the encryption of a mathematical puzzle made of encrypted hexadecimal characters. Once this complex task is done, the transaction in the form of a block is added to the chain of blocks<\/strong>, connected to all other blocks and stamped in the blockchain accounts. The recipient then receives their Bitcoins.  <\/p>\n\n\n\n

Proof of Stake (PoS) is another mechanism used by blockchains<\/strong> \u0430<\/strong>nd cryptocurrencies other to Bitcoin<\/strong> to validate transactions and is one place where <\/strong>blockchains and smart contracts<\/strong> meet<\/strong>. Compared to the PoW method, PoS only relies on the validators (stakers), which are randomly chosen based on how much their staked funds, and their funds are locked in special smart contracts. They then get the chance to create new blocks and approve transactions.   <\/p>\n\n\n\n

A single Bitcoin costs 28.302,70 USD as of October 2023. Having that in mind, most people would want an extra sense of security when pressing that transaction button. This is why blockchains exist and their security makes them so trusted in the crypto world<\/strong>.<\/p>\n\n\n\n

Blockchains Vs. Traditional Databases<\/h2>\n\n\n\n

Both blockchains and traditional databases are used to store some type of information, but they come with different benefits. Online users nowadays are more likely to trust a blockchain ledger <\/strong>compared to traditional databases. But for some, a traditional database is better.<\/p>\n\n\n\n

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\"Blockchains
Blockchains vs. Traditional Databases<\/figcaption><\/figure>\n<\/div>\n\n\n\n
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\"Blockchains
Blockchains vs. Traditional Databases<\/figcaption><\/figure>\n<\/div>\n\n\n\n

Blockchains are suited for cryptocurrencies and other Web3 assets like NFTs and DeFi services. <\/strong>Traditional databases, on the other hand, rely on centralized storage servers and their systems for confidential records or for a database structure that records more in-depth information in fixed formats of fields and rows. These have a centralized system that has central authority in control of the database.  <\/p>\n\n\n\n

With basic user authentication, sometimes the likes of username and password, these databases can be tampered with if they are in the hands of malicious users, unlike blockchains, which provide more elevated security with private wallets and encrypted keys<\/strong>. And even if the traditional database system had the same sense of security, it still might not be enough, because the records can not only be written and read like, but they can also be updated and deleted. Once a transfer is created in the blockchain then it cannot be tampered with and a record in a traditional database can be erased and deleted forever. <\/p>\n\n\n\n

Traditional databases might be better for smaller businesses which would want to have complete access and control over their data. Blockchains, however, provide a more elevated security than any other database due to their security<\/strong>, and the benefits of that can come in masses for prosperous businesses.<\/p>\n\n\n\n

Examples of the Most Secure Blockchains<\/h2>\n\n\n\n

Knowing what a blockchain is and why it is needed, it\u2019s important to look at some great examples of the most secure blockchains. Having a digital ledger with top-notch security is very important<\/strong>, and these use cases show exactly how to create it.  <\/p>\n\n\n\n

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  1. Bitcoin<\/strong> \u2013 This is the most famous cryptocurrency out there, with a secure and reliable blockchain. The BTC blockchain is a public blockchain, recording every Bitcoin transaction made and provides a transparent and decentralized network. <\/li>\n<\/ol>\n\n\n\n
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    1. Ethereum<\/strong> \u2013 The second most famous crypto coin is the Ethereum (ETH), and it comes with its own blockchain. The ETH blockchain, as similar as it is to the BTC one, is used for more than coin storage. It also serves as an operating system (OS) for decentralized apps (dApps) and smart contracts. In fact, smart contracts are a key factor in how the blockchain operates, as they allow developers to use the blockchain for applications, databases, services and even games. And finally, ETH is the most popular blockchain used for NFT minting. <\/li>\n<\/ol>\n\n\n\n
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      1. IBM Blockchain<\/strong> \u2013 IBM is a famous and trusted multinational technology company. Since they tapped into the blockchain pool in 2016, they have added enterprise blockchain services to their catalogue of products. The brains behind the company develop private blockchain solutions, for example, the IBM Food Trust. Their solution provides a system that tracks food items as they are moved through the supply chain. The cons of this are that they eliminate any purposeful food fraud and ensure the delivery of the best products. They also ensure minimal food waste and accurate product shelf-life evaluation.  <\/li>\n<\/ol>\n\n\n\n
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        1. eXchange inFinite<\/strong> \u2013 The XinFin hybrid blockchain is aimed at the global trade and finance sector, enabling tokenization, digitization and trade transactions and increased flexibility in liquidity management for financial institutions. The blockchain prides itself on offering more transactions per second than the top two blockchains while keeping the average fees significantly lower. They also provide smart contract support and significantly lower energy consumption.<\/li>\n<\/ol>\n\n\n\n

          Benefits of Blockchains for Your Business<\/h2>\n\n\n\n

          Blockchains are something that many industries and businesses can profit from. By revolutionizing the way people interact digitally with finances, non-tangible products and future technology, blockchains provide a long list of benefits<\/strong>.<\/p>\n\n\n\n

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          Blockchains enable the:<\/strong><\/p>\n\n\n\n