The Blockchain is a decentralized or a distributed ledger technology that allows a number of participants to maintain the ledger verifying and authenticating transactions on the ledger to ensure that everything to goes on the record is a true event that took place. Here is a list of terms that are usually thrown around in conjunction with the blockchain that would be handy to understand:
This simply means that the authority to verify transactions is not in the hand of one central figure. For instance, in the case of a basket of oranges which I own and sell, I could give it to someone standing in a room of 50 people to record my sales and purchase while I run to pick my kid from pre-school, in that instance that person is a centralized entity. Meanwhile, I could give that responsibility to everyone standing in the room then the maintenance of my orange records is now decentralized and everyone participates in the recording transactions from my basket. Same with the case of the decentralized public ledger. The power to verify transactions is in the hands of specific people called miners (in the case of bitcoin).
A database of entries like is used in an accounting system. It is used to record events or transactions that have occurred in the past. Think of the ledger as a book where I record the purchase and sales transactions from my basket of oranges.
A node is a replica of the ledger, all nodes on the network hold a copy of the ledger and every full node would have a copy of all the transactions that have occurred on the network, there are also lightweight nodes that have a partial version of transactions that have occurred on the network. So the bitcoin network is maintained by nodes that are spread around the world.
Back to the orange analogy, the nodes can be several people who are anonymous to you but hold a copy of the ledger. They can view all the transactions happening, are updating new transactions as they happen as well as taking notes on the transactions.
A block is a number of transactions or entries bundled into the ledger that makes the network. Think of a block as a page in the ledger or book that carries the transactions entered into the network by miners. Each of these transactions are entered into blocks, verified and each block is chained together to form the blockchain. As in my analogy, a page from my ledger with individual transactions of purchase and sales from my basket or if any orange goes bad while in the basket would make up the block.
Don’t think about gold diggers, think of them more like accountants that verify that inputs into the ledger are true and correct. They verify occurrences or changes in the ledger as they occur through a process called proof of work (for the bitcoin blockchain) using specialized equipment and computers. In my analogy, the miners are people that have gotten special rights to verify that a purchase and a sale has occurred from my basket because they have taken the pains to go and buy the stipulated fountain pen I asked people to use in the ledger, note that for my ledger anyone can become a miner so far you are willing to go and buy the specialized fountain pen.
Private keys are like your signature as a participant on the network that you use to sign transactions and verify that you approve a transaction or a change to your bitcoin. Think of it as your password. If someone holds your private keys, the person basically has access to all of your cryptocurrency and that can be the end of your coins if they are malicious.
Your public key is a pseudonymous identifier that people transact with. If someone is sending you a bitcoin, they are sending it to your public key and this data is usually broadcast over the network. Think of your public key as your email address. It is usually alphanumeric and fun fact, it is said that the number of public keys on the bitcoin network exceeds the grains of sand on all the beaches on earth. Sweet right?
This article is in partnership with Quidax. Quidax is a European based digital assets exchange with a focus on Africa. We provide a seamless platform for users to send, receive, buy and sell cryptocurrencies using their local currencies.
This article is in partnership with Quidax. Quidax is a European based digital assets exchange with a focus on Africa. We provide a seamless platform for users to send, receive, buy and sell digital currencies including Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin Cash, and Bitcoin Gold using their local currencies.