Do you speak blockchain?

BLOCKCHAIN

Or “blockchain” is an official, public record of information. Each block (or folder) has a size in megabytes.

MINORS

Since there is no central authority (the bank in a banking transaction), the operations must be validated by miners, that is, they must solve a complex mathematical operation. The first to find the solution pockets the reward (a bitcoin, for example).

MINING POOL

As the demand for bitcoins grew, miners tried to solve the bitcoin blockchain math problem to get the reward. Then they got together to have more computing power and be the first to find the solution. In 2014, the Dutch pool GHash.io controlled 55% of the world’s computing power, 51% enough in theory to take over bitcoin. Before committing to reduce their power.

HASH

The hash is a bit like the DNA of a block, a string of bits that can store all kinds of data (text, image, etc.). Bitcoin’s “hash” function is SHA-256. Each block has a hash that starts with the hash of the previous block, which helps to put them in order. A block includes the hash of the previous block, the data, the signature (to know who owns the transaction), the proof of work and the hash of the block being validated.

PROOF OF WORK

Better known as proof of work. Each time a block is created, a hash value is set. Miners are going to have to find the hash of the next block from the last one, the algorithm, and a “nonce” (a special number) to meet certain characteristics (for example, the next hash must start with at least eight 0s ). They will try until they find a matching hash. For this, they need large computing powers… which means that the process is highly criticized for being greedy in electricity.

PROOF OF PARTICIPATION

Or proof of stake, no longer consists in carrying out complicated mathematical calculations, but in demonstrating that one possesses a certain quantity of the tokens of the blockchain. This amount allows miners to validate the additional blocks of the blockchain and therefore to receive the reward. Less energy-intensive, it is also deemed less safe. Ethereum, the second largest blockchain in the world, is expected to use PoS in version 2, which is due out shortly.

ALTCOIN

These are all currencies other than bitcoin that rely on blockchains.

STABLECOIN

It is a cryptocurrency backed by more traditional currencies such as the dollar or the euro. The whole secret consists in theory in keeping as many stablecoins as dollars in your vaults. Each variation of either will result in buying and selling movements which must bring the PEG back to the fixed rate (one dollar for one USD Tether, for example).

SMART CONTRACT

Or “smart contract”, on ethereum, allows you to perform a maneuver when a condition or a series of conditions are met. A smart contract can predict that the reader donates one euro each time he reads this article when he turns the page. Without the reader or the person who wrote it intervening.

DAPPS

Writes DApps, it is an application that bundles a collection of autonomous smart contracts.

Challenge

Or “decentralized finance”, is the use of these smart contracts to get rid of banks, insurance companies, financial institutions, even States.

DLT

Or distributed ledger technology (for distributed ledger technology) has been highlighted with the development of the bitcoin blockchain, which is just a special type of DLT. A distributed ledger has no central administrator or centralized data storage. It can be used in finance or internet of things.

This article was written for the magazine edition of
Paperjam of the month July 2022
published on June 22, 2022.

The magazine content is produced exclusively for the magazine. It is posted on the site to contribute to the complete Paperjam archive.


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Do you speak blockchain?


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