Thread by @codingyuri

WTF is crypto and blockchain??

Explained from the very start (for the real fucking beginners) 😆

A thread 🧵

With Web3 trending, there's a lot of people trying to get into the crypto and blockchain space.

There's plenty of resources for 'beginners', but as a person with NO technical background at all, most of it seems like technical jargon...what if you don't know any of that shit?😂

Friendly reminder that I'm still learning!

Feel free to correct me if I'm wrong and give me any advice, be nice though lol😂

Also, I'm hosting Web3 and blockchain conversations/threads on the Ponder app, so join me if you're interested!!

getponder.com

In this thread, I'll do my best to explain WTF cryptocurrency and blockchain is...for a non-tech peson to understand! 👇

Contents:
-What's crypto?
-What's blockchain?
-Characteristics of crypto/blockchain
-What is centralization + pros/cons
-What is decentralization + pros/cons

➡️ What's cryptocurrency?

Cryptocurrency is just currency that's stored digitally and is decentralized, meaning that it's not issued by a central authority like the government.

2 ways cryptocurrency is secured:
- cryptography
- distributed consensus

- Cryptography

From what I understand (correct me if I'm wrong please!), cryptography is a series of random letters and numbers (secret writing) that basically hides information from others. It guarantees the security of transactions and identities.

- Distributed consensus

Distributed consensus is like a democracy. All nodes (members of the group) in the network have to reach an agreement.

You'll have to get an unanimous vote for something to happen

In Bitcoin, these members that are part of the network are called miners

BTW, in Bitcoin blockchain, miners have economic incentive, so it's on every member's best interest to act accordingly!! 😆

➡️ What's blockchain?

Blockchains are distributed databases that record every transaction made on a cryptocurrency's network.

You can see it as a block that stores data (transactions) within a given period of time.

These blocks are linked together with cryptography.

In the Bitcoin blockchain, a new block is generated approx. every 10 mins.

The information inside a block is available for everyone to see, even the general public.

Also, once a block is mined, it cannot be altered!!

➡️ Crypto characteristics

1. Anonimity, kind of?

The whole thing about crypto is that it's anonymous, and not tied to a person's identity (personal data).

That is true, but keep in mind that it's not 100% anonymous because you have a public key that represents YOU.

2. Limited supply

Crypto can't be inflated, Bitcoin has a supply cap of 21 million.

We're actually very close to reaching the supply cap. Once we reach the supply cap, it's my guess that transaction fees will increase. This is because there's no more Bitcoin available to mine.

Since there's no more Bitcoin available for miners to mine, the only economic incentive left is transaction fees.

3. Divisible

Crypto is divisible, you don't have to buy/exchange exchange exactly 1 Bitcoin, you can buy 0.2 Bitcoin, for example.

➡️ Blockchain characteristics

1. Decentralized

Distributed consensus, meaning the members of the network decide who gets access/updates the blockchain. No single third party.

2. Tamper proof

It's not impossible to tamper with the blockchain...but it's unlikely to happen👇

This is because everyone in the network has to approve of a change or update, so any blocks that conflict with existing ones will be rejected.

Technically, you could override the network by creating more nodes on your favor.
This is called a 51% attack.

A 51% attack is when you or a group of miners take control of more than 50% of the network.

However, this takes a shitton of computational power, which is also very expensive....it's just very unlikely to happen.

➡️ What is centralization?

Centralization is when a third party is in charge. For example, a central bank or the government. In a centralized system, there's hierarchy levels, the authority figure being at the top.

Pros:
1. Efficiency - all data is stored in one place, all programs are executed at once

2. Updates are easy because you only need approval from that single third party.

For example, Facebook. Facebook doesn't need approval of every FB user to make updates to their app.

Cons:
1. Lack of sovereignty - The single third party does what it wants and may choose to use your data how it wants to.

2. Single point of failure - if anyone wanted to attack or hack, they only need to attack the single party in charge.

➡️ What is decentralization?

Decentralization is when no single party is the only authority. The distributed network is in control control and is responsible of decision-making (like a democracy).

Pros:
1. Sovereignty - you have control of your data and know how it'll be used

2. No single point of failure - It's harder to attack a decentralized system because the whole network has to be taken down (or at least 51%), unlike with a centralized system, where it's a single point of failure. You only need to attack the central authority.

Cons:
1. Not efficient - every node (computer) has a copy of the data (data is duplicated) and programs are re-executed accross the network.

This means that when you want to update something, it has to update on every computer of the network.
This makes it slow and inefficient.

In short, in a centralized system, you sacrifice privacy and sovereignty for efficiency.

On the other hand, a decentralized system might be slow, but you have a distributed network.

Thanks for making it through this long ass thread!😂

Check me out @codingyuri if you liked this thread, and feel free to give me suggestions❤️

Also, don't forget to join me on the Ponder app if you're interested in me talking about blockchain!!😆

getponder.com