BLOCKCHAIN: THE TECHNOLOGY BEHIND THE RISE OF

CRYPTOCURRENCY

What Is Blockchain?

Blockchain is now everywhere within a short time. It is a technology

invented in 2008 to power Bitcoin before its arrival.

Putting into consideration the daily churn of news around blockchain,

coupled with sharp rise in the value of bitcoin and other
cryptocurrencies (altcoins) that rely on the technology, it is normal to
start wondering what blockchain means in a real sense.

Let’s Describe It This Way:

First and foremost, a block could be a record of new transaction. This

record could be a voting record, cryptocurrency’s location or even a
medical data. Whenever a block is complete, it is added to the chain.
The chain of blocks created in this situation is referred to as a
blockchain, starting with the first block aka the genesis block.

Cryptocurrencies are usually encrypted. When any transaction is

processed, it involves offering solutions to complex mathematical
problems. As blockchain grows, these problems become tougher. The
people who offer solutions to these equations are known as miners.
They are usually rewarded with the specific cryptocurrency in a process
known as “mining”.

Assuming you own a cryptocurrency, it means you possess the private

key to the cryptocurrency’s address on the blockchain. This key is so
essential because with it, you can initiate the withdrawal of the
currency and use it to spend.
What happens if you lose your key?

You will be unable to withdraw your money. This is due to the fact that
your account is unique and has a public key which allows others to send
cryptocurrency to it.

The information on the blockchain is made public and is kept

decentralized. This implies that it is dependent on the “nodes” and/or
server to function. As such, everyone is able to see any transaction
carried out on it.

How Is Blockchain Decentralized?

There are three essential structures in the field of network

architectures. They are centralized, distributed and decentralized
systems.

In centralized system only one single authority exists, as the state of the
system is stored on a particular tech system. The distributed system
features a situation in which division occurs in more than one
computer. In case of a decentralized system, no node has central
authority over others. This implies that if a node fails, the decision-
making process of the system will not be affected nor tampered with,
and will be carried on regardless.

The Bitcoin network is decentralized since there is no peer with a

central authority. What this statement means is that nodes in a peer-
to-peer network communicate with themselves. They usually share
different kinds of data via a communication protocol. Every computer
receives the same data on the network.
This decentralization is a huge benefit because it eliminates every risk
associated with centrally held data like data loss and theft. It is
impossible for anyone to alter your data without first changing the
information on all the servers.

In the case of Bitcoin, the system is decentralized; hence, its control is

not in care of any central entity or intermediary. Anybody across the
globe can easily access the network provided he or she has a computer
and an internet connection.

In conclusion, we can reliably consider blockchain as being

architecturally decentralized, as it does not have a central point of
failure.

MINING IN THE BLOCKCHAIN

Many people have wandered how Bitcoin came into being and how it is
circulated. The response is straightforward. Bitcoin is mined so that the
cryptocurrency can exist in the Bitcoin market.

Satoshi Nakamoto, the creator of Bitcoin thought upon an idea which

makes it possible to exchange Bitcoin online via a decentralization
technique. This implies that records of transaction history of the entire
system are never held centrally.

There is a ledger that facilitates this process. It is referred to as the

"blockchain". This ledger facilitates the regular appearance of several,
new data points at all popular Bitcoin . It expands every minute and will
be available on machines that are on the network of Bitcoin.
The authenticity and validity of these transactions and their recordings
into Blockchain are justified by the Bitcoin mining process.

The creation of new Bitcoin and compiling transactions to the ledger

are made possible via mining. Besides, mining involves offering
solutions to complex mathematical calculations. An individual or a team
involved in this solution is greatly rewarded.

The issue of double spending does not arise in mining because

outstanding transactions are mined into a block at close and consistent
intervals; hence, the issue of inconsistency or illegitimacy does not
arise.

In short, Bitcoin mining is the process of adding transactions timed at

each segmented “block” to the ledger. The process helps us to
ascertain that a block is given sufficient computational effort and that
new Bitcoins are created in each block.

In order to mine, there is a need to verify the validity of these

transactions in a block. The “proof of work” problem needs to be
solved prior to adding a new block to the blockchain. The problem
ensures that the intended block to be created is tough and that the
data, from which the block is made, conforms to the developed
standard.

Bitcoin uses the Hashcash proof of work; therefore, for you to solve the
problem, you need to create a hash.

Creating a Hash
Creating a hash from a collection of Bitcoin blocks is quite easy. Hashes
are found at the blocks and you have to combine them to prove that
your data is legitimate.

Note that a particular block has a unique and specific hash. Hence,
manipulating a given block implies that you changed the hash.

A miner who runs a hashtag function on the manipulated block will only
discover that he is working on a fake block which will never produce
any reward.

Mining Reward

You will receive a mining reward whenever you successfully solve a

proof of work. The extent of your Bitcoin reward will be determined on
factors like complexity of the problem and speed of your computer. The
more problems you solve, the more money you get. Also high speed
computers are required for solving as many problems as possible.

Conclusion

Bitcoin mining is highly rewarding if you possess the right tools and
relevant information. Besides, it's a fun and safe way to transfer money
across the internet.

Get the right software and powerful computer hardware to enable you
make as much money as possible.

HASH FUNCTIONS AND HOW MATH IS INTEGRATED INTO THE

BLOCKCHAIN

Introduction
Hash functions are a fundamental part of blockchain technologies. The
knowledge of hash functions makes it easy to understand other
concepts like digital fingerprints, tamper proofing and provenance.

What Is A Hash Function?

The concept of hash function is simpler than many people have

imagined. What confuses people is the amount of jargons involved in it.
In simple terms, a hash function takes some input data and creates
some output data.

Explaining this concept further, a hash function takes an input of any

length and creates an output of fixed length.

It takes an input string while a string of random letters and numbers are
created. An example of this is “a0680c04c4eb53884be77b4e10677f2b”.
We referred to this as the message digest or the digital fingerprint.

Types of Hash Functions

There are lots of different types of hash functions. However, the basic
ones that involve the blockchain are SHA256 and RIPEMD. Numbers like
128 or 256 refers to the length of the output. This implies that SHA256
will produce a 256 bit output.

Detecting Change

You can detect if an input has changed. An easy way to do this is to get
two proclaimed versions and compare their message digest. In the
event that they both match each other, then the holder of the
mortgage title is truly the owner of the house.

Collisions

A lot of people have been wondering about how possible it is to never

come across the same message digest. The fact is that message digest is
not infinitely unique; however, it will probably take no less than a
billion years to get two different inputs that will result in the same hash
output.

One way

One way is another property of hash functions. Calculating a message

digest is easy, but in a situation where the digest is given, figuring out
the output is impossible. Its possibility will also take no less than a
billion years or so.

Compression

Compression is another way to think of hash functions. You compress a

large input into a very short string representation of that input. This
summary or digest can then be used to help detect if the input has
changed down the track.

How This Is Related To Blockchains

Blockchains make use of hash functions everywhere. Data on the

blockchain is “hashed” in each block. The hashed data is unique and
cannot be changed. In the event that a person attempt to change it by
altering the number of bitcoin he or she owns, or make attempt to
change the value he owes someone, the hashed value would be
different and everyone could detect that something had changed.

The hashed value of a current block is calculated from the hashed value
of a previous block. This is how a mathematical link is created between
the blocks.

Conclusion

Hash functions are purely immutable meaning unchanging and as a

result, a lot of people usually talk about their provenance, i.e. a record
of where something came from. It is amazing to know that whatever
change that is made to a hash function will be detected and rejected by
the other nodes.

UNDERSTANDING PUBLIC AND PRIVATE KEYS

Assuming you want to send a message to someone which you don’t

want anyone else to read, what will first come to your mind is
encryption. This is because it gives confidentiality. However, some
issues need to be addressed.

Shared secrets are classically or symmetrically encrypted. This is known

as the key in the computer world. The issue is that you and your
partner will have to know the same key if both of you wish to
communicate confidentially using symmetric encryption.
Communication in this instance involves some secure means prior to
using this key. The key should be sent confidentially so that a
confidential channel can be created.
It is only the two people involved that know the key, and can happily
transmit messages to each other using it, in the knowledge that nobody
else can read those messages.

This does not proffer a perfect solution especially in the internet world
when we might want to talk securely to a few dozen parties a day. That
would be a whole bunch of secret meetings to set up, a whole bunch of
keys to keep track of, and a fortune in travel costs.

This eventually led to the intervention of some really clever

mathematicians in the field of Asymmetric cryptography which can be
termed to be a smart bit of maths that allows us to use a pair of keys-
one key for encryption and one key for decryption. Generating one key
from another is impossible.

Consider it this way: the encryption key is a padlock. You just click it
closed and it locks. The decryption key is like the padlock key.

This Is How It Works

Suppose I want to communicate with you securely, but we have never

met nor share any secret, you will send your padlock to me and I write
my message to you, insert it in a box, and lock it with your own padlock.
You keep your padlock securely at all times and as a result, only you can
unlock the padlock. Once I have locked the box, not even I can open it
anymore because I don't have the key. I then send the box safely to
you, knowing that you are the only person that can unlock it.

A person who keeps watching our traffic sees that you send over your
padlock (encryption key), but they can't do anything with that padlock
because only you can open it. The mathematics of the system prevents
them from examining the padlock to figure out how to make a key for
it.

The public and private keys feature two cryptographic keys that are
uniquely related. These keys are normally long numbers that are
randomly arranged.

A Public Key looks like this:

3048 0241 00C9 18FA CF8D EB2D EFD5 FD37 89B9 E069 EA97 FC20
5E35 F577 EE31 C4FB C6E4 4811 7D86 BC8F BAFA 362F 922B F01B 2F40
C744 2654 C0DD 2881 D673 CA2B 4003 C266 E2CD CB02 0301 0001

As it is being called, it is public. This key is available to people through a

publicly accessible repository or directory. It is a fact that the public key
remains confidential to its owner. If a document for instance is
encrypted with a Public Key, it is only a corresponding Private Key that
can decrypt it, and vice versa.

CRYPTOCURRENCY EXCHANGES AND WHAT THE ENVIRONMENT LOOKS

LIKE

It is obvious that every financial transaction has gone digital.

Cryptocurrency involves buying, selling or exchange digital currency.

Since the first half of 2017 till present, there have been massive
changes in trading volumes in crypto exchanges, like Bitcoin and Ether.
This implies that the global market is being reshaped.

This write up is aimed at educating, informing and enlightening you

about Crypto exchanges.
 What Are Crypto Currencies?

There is no doubt that you might have heard of Bitcoin as at the time of
reading this post. This alternative currency that was ‘invested’
anonymously in 2009 is very attractive due to:

 Partial, Strong anonymity.

 Absence of transaction fees.
 Absence of middle men or banks involved in the transactions.

In addition, it has become globally known with more and more

merchants accepting them because there are no credit card fees.

A lot of people are confused about how possible is it for someone to

create something that isn’t tangible like a Bitcoin, when it only exists in
theory.

This is very interesting. Unlike any other metal, Bitcoins are mined. The
miners are individuals who compete by solving complex mathematical
puzzles via computer. The winner is rewarded with Bitcoins.

Essentially, the miners empower computers to verify the transactions

of other users. This is a complex process that leads to cloud mining,
which allows people to earn Bitcoins without dealing with all the
complicated hardware, software and other issues in the process.

Bitcoin is the trend-setter here. However, there are several other

alternative currencies that come to limelight after it.

How to Buy Cryptocurrency

When we think of Cryptocurrency trading, what easily comes to mind is
an alternative to Forex (Foreign Exchange) trading: The trading of
traditional currencies.

Crypto currencies are neither assets from a returns perspective nor

stocks themselves. However, the best way to describe them is from the
perspective of finding a penny stock to play.

Types of Cryptocurrency Exchanges

Cryptocurrency exchanges are classified into three types. They are:

1. Trading Platforms

These platforms are websites that connect buyers and sellers. For each
transaction, there is a fee charged.

2. Direct Trading

These are platforms you can trade directly with various people across
the globe. Here, sellers set their own rates, since there are no fixed
market prices.

3. Brokers

These are the websites that are set up to deal specifically in

cryptocurrencies at prices set by the broker. Operations of
Cryptocurrency brokers are similar to that of the Forex brokers. The
only noticeable difference between the two is that in cryptocurrency
market, you get digital coins or tokens while in Forex, you get fiat.

Finding the Ideal Crypto Broker

There are numerous crypto brokers existing at present. Each broker has
his or her limitation in respect to the type of currency to accept for
purchases of cryptocurrency. It is highly essential to research them
carefully before determining your choice.

Below are important considerations to put in mind when you

researching and vetting your prospective broker.

 Does he or she have geographical restrictions (does the broker

work where you are)?
 Does the brokerage have good reviews on relevant forums?
 Do you have knowledge of the exchange rates, which can
fluctuate? (Find out).
 Are the fees clear?
 Are the payment methods flexible?
 Find out the verification requirements? Is it anonymous, and is
this important to you?
 What forms of digital currency does the broker deal in?
 CRYPTOCURRENCY ECONOMICS
 There are fundamental principles that apply to the pricing and
availability of goods and services in an ideal market. At the same
time, these forces affect the value of currency.
 Currency is any commodity or item, whose principal use is as a
store of value. In early times, the principal value store used are
precious metals and gems. People use precious jewels, gold and
silver as currency to acquire goods and services.

 Of recent, cryptocurrency came to limelight with the introduction

of virtual currencies. The most widely among them is the Bitcoin.
 However, there are still several other virtual currencies or crypto
currencies in existence.
 It is generally known that cryptocurrencies are volatile. Despite
the regular chanting of “HODL” on Reddit and other social media
platforms, a lot of people still refuse to sell when it crashes.
 Interestingly enough, it was discovered that Bitcoin crashes
roughly once per quarter. Not a few people usually display
panicking whenever the price of Bitcoin drops a little more than
expected. Classical economics has explained the behavior of
people as rational, making them to make logical decision and take
concise actions from iterating past information.
 The most popular exchange and medium to purchase BTC, ETH,
and LTC is the Coinbase. As at November, 2017, it has attracted no
fewer than 13.3 million users.
 The process of purchasing cryptocurrencies has become so easy.
In fact, young boys and girls in the adolescent age range can
download Coinbase from the Apple app store, connect their bank
account, and start purchasing.
 In 2009, a group of people use the pseudonym Satoshi Nakomoto
to create Bitcoin. Its creation is intended to eliminate the need for
banks or third parties in transactions. Furthermore, it allows total
anonymity of the holder of the coin.
 What Makes Bitcoin Valuable?
 More and more organizations are now accepting Bitcoin as a
means of payment. As a result, its perceived value has increased.
 Through Bitcoin, people can now transfer money over the
internet. It is controlled by a decentralized network which has
some rules to adhere to. These are the basic rules of supply and
 demand. There are essential tools that every currency should
possess, to make trade easier and enable holders to convert
goods into a widely tradable commodity through sale. As a user,
you can use the proceeds of that sale to purchase whatever you
desire.
 Bitcoin on its own provides an alternative to central bank
controlled fiat money.
 At present, Bitcoins are not like other currencies because they
don’t possess universal acceptance.. What they can be used for is
limited. Despite the fact that Bitcoins are not backed by a
government or being valuable by themselves, they are still used as
a store of value. Besides, they are easily used as a placeholder for
the goods and services that they can be exchanged for, as with
traditional currencies.
 One important feature of Bitcoin is its uniqueness. Despite the
fact that it lacks official backing or wide acceptance, numerous
people are still willing to trade and accept it.
 Sincerely, a lot of people see Bitcoins as being more useful and
essential to them than other currencies because they are better
option for certain financial transactions like seamless digital
transfers. Their usability is also across borders. Besides, they
prefer it because there is a limit set on the total number of
Bitcoins that will ever exist; hence, the currency cannot be
devalued through inflation, as others can.

Blockchain Technology: An introduction

 The Blockchain is an encoded, allocated database that facts records,
or at the end of the day it's far a computerized record of any
exchanges, contracts - that desires to be autonomously recorded. one
of the key highlights of Blockchain is that this virtual record is accessible
over various hundreds and loads of laptop and isn't generally certain to
be stored in a solitary region. Blockchain chain has just begun
disrupting the financial services area, and it is this age which supports
the digital currency- bitcoin exchange.

With Blockchain technology in financial sector, the participants can

have interaction at once and can make transactions throughout the
internet without the interference of a 3rd party. Such transactions
through Blockchain will not percentage any personal data concerning
the participants and it creates a transaction document via encrypting
the figuring out facts. The maximum interesting feature of Blockchain is
that it significantly reduces the opportunities of a information breach.
In evaluation with the conventional methods, in Blockchain there are
more than one shared copies of the equal records base which makes it
tough to salary a information breach assault or cyber-attack. With all
the extortion safe highlights, the square chain innovation holds the
ability to alter different business areas and make techniques more
brilliant, secure, self-evident, and more prominent productive in
contrast with the customary business systems.

Different Application of Blockchain Technology

Blockchain Technology is already making headlines across the world for

its potential to revolutionize the future of industries. It already did in
the financial/currency sector by introducing it’s first product called,
Bitcoin, world’s first decentralized cryptocurrency. For those who are
new to the term, Blockchain is a distributed public ledger that can
contain any information that people save into a computerized database
and spreadsheet. It existed with the Bitcoin, decentralized
cryptocurrency and utilized a distributed ledger to keep track of all
transactions. This distributed ledger technology is now known as
Blockchain and has been under the scan for its potential uses across
several industries.

Blockchain generation programs throughout extraordinary sectors:

Legal system

Blockchain era could beautify the legal industry operations via

reinforcing its report preserving features. statistics ever uploaded could
remain for reference. Blockchain can contain facts of their fixed form,
but can allow changes handiest in circumstance when all contributors
agree to the change. Unilateral adjustments are out of scope.
therefore, retaining data on Blockchains could lessen the probabilities
of human errors and remove the times of surreptitious adjustments.
For all these reasons, the technology is being taken into consideration
an innovative manner to perfecting the procedures of legal notice.

Healthcare sector

Healthcare institutions are constantly faced with the need to safely

proportion data across platforms, that is a major concern these days.
higher data collaboration between providers is required to augment
opportunity of accurate analysis, growth probability of effective
remedies, and permit healthcare facilities to deliver price-powerful
care.
Blockchain could permit hospitals, financiers and other parties inside
the healthcare value chain to percentage information without
compromising records security and integrity.

Coverage contracts

Blockchain in coverage region is for smart contracts. The technology

should provide complete transparency thereby facilitating renovation
of irrefutable statistics for handling claims. As all the statistics would be
demonstrated by way of the network, there might be lesser
probabilities of fraud and identical claims. Streamlined claim system
will simplify matters.

Identification management

Apart from economic usage, Blockchain generation also can help in

identity control, in regions like e-residency, virtual identities, wedding
certificate, birth certificate, passports, online account logins, IDs, and so
on. Blockchain generation can provide better manipulate over
stockpiled records, its access and utilization. Civic, a these days released
ICO is an excellent example of the software of Blockchain technology in
identity control. That is just a brief assessment of potential application
of Blockchain technology. With the evolution of internet of factors, the
Blockchain era could anticipate to find even greater regions of services.
To study a number of the use and carried out instances of the
distributed ledger across distinct sectors, visit our “BLOCKCHAIN
section”

1ST, 2ND AND 3RD GENERATIONS OF BLOCKCHAIN AND WHAT THEY

MEAN/STAND FOR
Introduction

Bitcoin, the first blockchain came into existence no less than 9 years
ago. The purpose of its creation is to provide people with the ability to
transfer value to each other, devoid a centralized third party verifying
the transactions. The first generation of blockchain technology is
referred to as Bitcoin’s blockchain.

There are now second and third generations of blockchains. The first,
second and third generations of blockchains will be considered in this
post.

First Generation of Blockchain

The first generation blockchains focus on moving value, ideal payment

systems and maintaining a ledger. Let’s consider them:

 Bitcoin
 Dash
 Monero
 Litecoin, etc.

The core of why Bitcoin was created is represented by these functions.

That is not all.

There is another core aspect to Bitcoin. This aspect is that it was

created to be open source. Satoshi Nakamoto made the code behind
Bitcoin open source and also gave opportunity to whosoever wishes to
learn from Bitcoin. Besides, he allows people to build on and expand
beyond it.
This is what brings about the second and third generation blockchains.

Second Generation of Blockchain

The Second generation blockchains are the ones like:

 Ethereum
 Ethereum Classic
 QTUM
 NEO, etc.

They are referred to as second generation because they record

transactions on a blockchain from which they expand these
transactions to incorporate programming languages.

These second generation blockchains allow customizable transactions

since they have released smart contracts. It is now possible for a person
to create transactions which he wants to execute in a customized,
unique and unusual way to fit the needs of the parties involved.

Third Generation of Blockchain

The third generation blockchains are the blockchains that can service a
large number of people and self-govern. The term “scale” comes into
action here.

Bitcoin has a large network and this is the reason for its robustness,
security and decentralization. However, it can be extremely tough to
scale whenever there the network accommodates large influxes of
transactions as a result of an exponential increase of its users. The
more the growth of bitcoin’s network, the more it decentralizes.
Open source has a lot of advantages. The developers are able to see
how a network is designed and how things are panning out. This will
afford them the opportunity to make the necessary changes right from
the onset in a bid to avoid future problems.

The core of Third generation blockchains features self-governance as

can be seen in the following blockchains, which use Delegated Proof of
Stake.

 Bitshares,
 Steem,
 ARK and
 Lisk

Delegated Proof of Stake is a system that allows the entire network

participants to vote, irrespective of the amount of coins that they hold.

This Is How Delegated Proof of Stake Works

A number of people acquire the position of witnesses via voting and are
given the responsibility to mine blocks and monitor the network. Since
all votes have equal weight, we can term this as a decentralization of
the voting process, meaning that it is not restricted to masternode
holders like in Proof of Stake consensus.

The required changes can efficiently occur due to the fact that there is
a smaller group of individuals working to secure the network. Besides,
these witnesses are product of election; it will be their best interest to
pay attention to other people’s welfare on the network.