Middlemen like Banks, custodial wallets and other third party apps were sometimes, if not mostly, a hassle for us to make a transactions.
But there exist a technology that can make our transactions easier without needing those middlemen and makes our transaction peer-to-peer, decentralized and easier - called Blockchain.
I will also include some helpful articles that is correlated with this article. I will put all of the links below for everyone to access it easily.
ELI5 For Blockchain Technology.
Let's have an example first using Bank;
You and your friends Apple and Ben eats in a restaurant. You will pay the whole bill and the 2 will just send the payment to you. After some time, your friends sent a payment using online money payment app but only Ben's didn't go through and reach your wallet saying there was an error.
And this could be one of the reasons:
The account was hacked.
Additional fees or charges in the transaction
Technical problem in the app or bank
Account's daily limit transfer is capped
What does this have to do with Blockchain?
This is how the idea of cryptocurrencies came to exist.
Cryptocurrency or virtual/Digital currency is running on a Blockchain Technology. And because of Blockchain, cryptocurrencies are;
Not in need of central authorities like the Banks.
Immune to hacking
Counterfeiting
And more
And the most known cryptocurrency of all is Bitcoin - so let's use it in an another example.
Let's say that you and your friends have 1 BTC each, and Apple send you 1 BTC as her payment to you. The transaction is made and created in form of the block. The details of transactions will be permanently incited in that block.
Now you have 2 BTCs after Apple paid you. And now Ben sent you 1 BTC too as his payment. The transaction made will create a new block and this linked to your 2 friends after both of them sent the BTCs.
This block or a chain of records is what we call a Ledger. The ledger is shared to your friends that acts as Public Distributed Ledger.
If Ben only has 0.5 BTC and send 1 BTC, what will happen?
Since each of you and your friends have the copy of ledger showing that Ben only has 0.5 BTC, his transaction will not go through and will eventually fail.
Blockchain can't get hacked because;
Every account or user has it's own copy of ledger.
Every data in the blocks are inscribed using complex algorithm.
There are two keys every Bitcoin user has;
The Private and Public Keys.
Private Key - an address used like a password to access your asset. Each user has a unique sequence of it.
Public Key - an address that is available for everyone to see/know.
Add-ons;
Miners - validate blocks in every transactions in the network.
Mining - a process in the network of adding block in to the Blockchain.
Proof-of-Work - a procedure of solving a very complex algorithm problem.
Helpful articles:
https://read.cash/@Kryptlook/crypto-basic-101-understanding-cryptocurrency-wallet-cc35efc2
Final Say.
Blockchain technology has a promising future for our financial needs and wants. The concept of decentralization plays a very important role for everyone's financial status. It might be too early but Blockchain Technology are slowly getting valued already and recognizing its worth, and I believe there will be more in the future.
END.
Well explained hahaha need ko ulit basahin para mas maintindihan ko😆