4 min read

Things you need to know about blockchain and crypto in 5 minutes.

Blockchain is said to be tamper-proof, insanely secure – and it’s also mooted to be the future of pretty much everything. Bullish investors are betting on it, bankers are scared of it and governments are wary of it.
Things you need to know about blockchain and crypto in 5 minutes.

What made me write this - Most content around crypto online has some stain of baises and opinions. I felt there are very few content that were purely factual and covered the concept and it's timeline in entiretiy.

This is going to be a long post, but feel free to skip sections that are not of interest to you. I've added the table of content for you to jump between sections.

Alright, let's get to it. Happy reading!

History of Blockchain

Source - Twitter post

1991-2008: Early Years of Blockchain Technology

Yes, the concept has been around for longer than we know of it.

How did blockchain emerge? Stuart Haber and W. Scott Stornetta envisioned what many people have come to know as blockchain, in 1991. Their first work involved working on a cryptographically secured chain of blocks whereby no one could tamper with timestamps of documents.

Fast forward to 2008 - during the aftermath of the Global Financial Crisis (“GFC”) a man called Satoshi Nakamoto (a man with a name but no face) released his white paper, Bitcoin: A Peer to Peer Electronic Cash System. In the whitepaper, he provided details of how the technology was well equipped to enhance digital trust given the decentralization aspect that meant nobody would ever be in control of anything.

The electronic cash system in question was Bitcoin, and with the public unveiling of Bitcoin in 2009 came the public unveiling of Blockchain, the technology that underpins the digital coin and makes it existence possible.

Blockchain History starts to gain relevance.

2009-Now:

The first era was defined by Bitcoin (invented in 2009), which gave us the distributed ledger, or blockchain, designed to facilitate peer-to-peer transfers of a non-sovereign digital asset.

The second wave was defined by Ethereum, which drew from the same underlying distributed, censorship-resistant architecture: however, unlike Bitcoin, Ethereum’s native programming language (Solidity) can be used to create any conceivable application, transforming it into a globally accessible supercomputer.

The third wave was the initial coin offering boom of 2017, which financed a range of projects, some of which have started delivering on their promise of a decentralized financial ecosystem.

DeFi is the fourth wave, and it builds on a combination of these innovations.

What do the words you keep hearing mean..

Cryptocurrency

Digital currency that is based on mathematics and uses encryption techniques to regulate the creation of units of currency as well as verifying the transfer of funds.

Mining and Miners

Mining is the process through which new bitcoins are launched onto the market. To validate each transaction and create the blocks, the miners must find the “hash” or digital key, for each block, in order to link it with the next one. Each time one of the miners finds one of these crytographic keys a bitcoin is “mined” and they receive payment in this same currency.

Nodes

The nodes are the computers that form part of the blockchain network. They are charged with storing and distributing, in real time, the updated copies of the transactions that are carried out. Each time a new block is generated and added to the general ledger, a copy is also added to all the nodes in the network. All the miners are nodes, but not all the nodes are miners.

Tokens

Tokens are units of value that can be acquired through blockchain, and  are also used to acquire goods and services.

Address (Wallet Address)

Used to send and receive transactions on a blockchain network. An address is an alphanumeric character string, which can also be represented as a scannable QR code.

Decentralization

The transfer of authority and responsibility from a centralized organization, government, or party to a distributed network.

Decentralized Application (dapp)

An open source, software application with backend code running on a decentralized peer-to-peer network rather than a centralized server.

Decentralized Finance (DeFi)

Decentralized finance—often called DeFi or open finance—refers to the economic paradigm shift enabled by decentralized technologies, particularly blockchain networks. DeFi represents a shift from a centralized and closed financial system to a universally accessible economy that is based on open protocols that are interoperable, programmable, and composable.

For the sake of keeping this post short and crisp, you can read more on these terms here

Cryptocurrencies

As of the moment I am writing this, there are more than 2,000 different crypto currencies out there. For the sake of yours and my sanity, I'll stick to the most noteworthy ones. You can check the entire list here

Transaction Lifecyle for Cryptocurrencies‌                    

Source : Blockgeeks

How wide is the current adoption for Crypto

Source : Medium

Winding it up...

There's so much more to blockchain out there than what I have covered. This is meant to be a starting ground and something that will encourage you to go read on areas of your specific interest.

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