The Ultimate guide to understanding Blockchain technology for non-techies.

Imagine yourself in a tech hangout or meeting and the essence of the meeting is "Web3 & Blockchain Technology"and there’s You!

Lost in the jargon they are spewing out of their mouths.

You can check out my article on Breaking down Web 3 in no technical terms

I know that feeling!!!

It's a confusing and self-doubting feeling of 'what am I doing here?, 'Do I belong here?' 'Will I ever be able to understand this?'

The answers are Yes and Yes.

So let's take a stroll.

Do you know that on the 31st of October 2008, an anonymous person or group by the name of Satoshi Nakamoto posted a Whitepaper to a cryptography mailing list titled " Bitcoin: A Peer-to-Peer Electronic Cash System". This was the roadmap to the invention of cryptocurrency, which officially launched on January 3rd, 2009.

What's Blockchain?
It’s more like your Basic science teacher asking you "what’s the matter?".

The matter is anything that has mass and occupies space, and matter is made up of molecules, and molecules are made up of atoms through chemical reactions.

See Blockchain as matter, Block as molecules, Hash as the name given to a formed molecule, Data as atoms, and chemical reactions as SHA256.

Data: could be anything: a piece of information, a string of anything.

Block: is a bunch of data.

Hash: This is a unique key and it's as unique as your fingerprint that represents a particular data that can be text, an image, videos e.t.c. It's called an immutable cryptographic signature that converts into 64 unique characters protected by standard encryption.

SHA256: stands for Secure Hash Algorithm 256-bit and it's used for cryptographic protection. It produces irreversible and distinct hashes.

So blockchain is a chain of blocks linked and organized in historical order, secured by cryptographic proof. It’s a series of blocks connected to the previous block by a common hash.

It's a digital ever-growing list of data records. It's designed to be highly resistant to change or fraud.

How does Blockchain work?

Once a block is mined, it's immutable.

To render a blockchain decentralized-it means to circulate the same version of the blockchain with different peers around the globe. The peers validate the blockchain-based on some consensus.

So what does mining mean?

Mining is verifying all transactions and putting them in the blockchain record.

Mining uses a lot of computational power and energy, because mining uses a lot of energy the miners are rewarded in form of transactional fees (gas fees).

Immutability is the ability of the blockchain ledger to remain unchanged. If we try to change data in a block then the hash changes, which means it also changes the hash of the previous and next block which leads to the blockchain peers not verifying data and making it useless.

A consensus mechanism is a fault-tolerant mechanism used to reach an agreement among distributed nodes.

Nodes: for computers to do computing work to verify the data stored in a block.

Peer: Node or a person, same as a miner.

Gas fee: it's the compensation you pay to miners to make your transactions happen faster.

How Does verification happen in blockchain?

The term coinbase transaction means the very first transaction of a blockchain where tokens are generated and sent to someone else " money is minted in thin air and transacted to someone else"

Verification of a block happens by consensus: Proof of work or proof of stake

Proof of work: There's a competition whoever comes first in the competition gets the reward and the other competitors get nothing.

In Proof of work, there's a cryptographic puzzle to verify the next block in the network. The node that solves the problem first gets the mining rewards. This has led people to build giant mining forms to get more mining rewards. Bitcoin uses POW

Proof of Stakes: Now imagine in the same competition instead of playing, all players agree to choose the winner.

People pool funds together for staking and whoever has the maximum gets to verify a block and earns the reward. Ethereum uses proof of Stakes.

If a miner validates a fraudulent transaction some of the tokens in his stake will be slashed, which means they will vanish into thin air. It ensures the correct behaviors of nodes.

What are Cryptocurrency wallets?

Cryptocurrency wallets - are to hold, secure and receive cryptocurrency in a secured manner like your bank accounts.

What are they technically?

They are software products that can securely carry your public and private keys

Public keys: This is your address e:g your email or your account numbers - anyone with this can send you money.

Private keys: This is your password, anyone with this controls the wallet and can make transactions e:g the password to your email, or ATM.

Cryptocurrency is the currency of the blockchain like BTC to the Bitcoin network and ETH to Ethereum.

Tokens are a medium of exchange for the P2P economy and are also used to reward miners.

Cryptocurrency always stays in the blockchain network and not the wallet, the wallet has a public and private key to access the currency in the network.

Types of Wallet?

There are software wallets, hardware wallets also known as self-custody wallets, and Paper wallets.

Software wallets are wallets where private keys are stored in a server, access is obtained by a centralized email account and the company has access to crypto e:g coinbase the company, Binance e.t.c.

Hardware wallets are encrypted soft stacks that hold your public or private keys, secured with seed phrases (12-24), they have access to your cryptocurrency e.g Ledger, Metamask, Trezor.

Paper wallet: Public and private keys are written on a piece of paper, you must enter your keys manually whenever you make a transaction, loss of paper equals loss of crypto.

What's Bitcoin?

Bitcoin is a native cryptocurrency of the bitcoin network.

Bitcoin Network: circulated ledger that operates on a proof of work consensus mechanism.

$BTC can be used as a medium of exchange on the bitcoin network by transferring it from one wallet to another wallet, thereby enabling transactions.

What's Ethereum?

Ethereum is a decentralized computer (it runs code that anyone can display) instead of using centralized servers, it uses thousands of computers around the world to perform operations. It makes it easier for smart contracts to be deployed on this network.

$ETH is a native cryptocurrency of the Ethereum network. It’s used to store and validate payments by miners in the network.

Smart contracts: These are business automation applications that run on a decentralized blockchain such as the Ethereum network and Solana. Smart contracts are censorship-resistant, and cannot be changed or shut down.

The ERC-20 Tokens

ERC-20 is a technical standard used to issue and implement tokens on the Ethereum blockchain.

Why is there a standard?

It makes it easier for people to build on top of ethereum

It makes it easier to interact with other tokens, applications, and platforms on the Ethereum network. E:g $Matic $WETH e.t.c.

Yes!

Now you have become a blockchain wizard with a few more added terms and jargon…. Go into the world of tech, make more evangelists, and have those conversations with your tech friends you were scared of having.

I know you were confused but look at you now, talking crypto lingo my dear friend.

Take a deep breath, tell yourself you got this cos

WAGMI 😁