What is a blockchain? This is the question that everyone’s been wondering about lately, especially after the NFT market blow up! So, understanding the term “blockchain” is no longer a thing for crypto connoisseurs only. NFTs have opened up a whole new path for people in the crypto world! And so, understanding the very core of it all – aka blockchains – is one of the basic parts of succeeding.
However, considering how much of a vast topic with so many complex layers, we get how it could become confusing. Therefore, we’ve decided to go over all the blockchain FAQs that everyone keeps wondering about. So, keep reading to get all the answers you could ever need! Also, if you want to learn more about other NFT or crypto basics, we’ve got just the thing for you! Just click on the button below to find out more!
WHAT IS A BLOCKCHAIN?
To understand what a blockchain is, you’re going to need much more than just giving you a technical definition. There are tons of different derivatives that all branch out of the same question! Like, what is a blockchain? How does it work? WHAT does it do? Things like that! And, we’re going to answer them all for you one by one. Starting with the most prominent one…
WHAT IS A BLOCKCHAIN?
So, to make the question – what is a blockchain – easier to understand, we’re gonna simplify it a bit. Taking out the super technical part of it, a blockchain is basically a decentralized, distributed digital ledger for keeping records. These ledgers are distributed across multiple computers called nodes that securely record and transfer data.
Then it organizes this data on the ledger into blocks or groups of data. Each block carries a certain amount of data and new blocks are continually added to the ledger. When the block is full, it is closed and linked to the previously filled block forming a chain.
Also, each block has its unique ID – a cryptographic hash – that protects the information inside the block. And, it protects the block’s place in the blockchain! Once the data is added to the block on the ledger it is encrypted with the hash (up to 64-digits). This is permanent and completely unchangeable! It has full-time data dating back to the very start! Giving you a basic understanding of what is a blockchain!
Properties of a blockchain:
– Decentralized and completely transparent
– Immutable and cannot be changed
– Fully secure
– Programmable (uses smart contracts)
HOW IS BLOCKCHAIN USED?
So, once you understand what is a blockchain, you can imagine all the great use that could come from it. In fact, there are so many applications for the blockchain. This is why people keep saying that this is the future and might soon become the norm! Here’s where you can use the blockchain to make your life easier:
– Cryptocurrency (the current most common use for the blockchain)
– Banking & Finance
– Asset Transfer
– Smart Contracts
– Supply Chain Monitoring
– Property Records
HOW BLOCKCHAIN WORKS?
Now that you have a sense of what is a blockchain, we’re going to go on to how blockchain works! In other words, we understand what it does, but how does it do it! Although it does A LOT, we’re mostly interested in work related to cryptocurrency and NFTs. So, this is how it works with respect to crypto!
– A new transaction happens that is distributed to a network of nodes across the world
– These nodes solve equations to confirm the validity of the transaction (chain mining)
– Once confirmed, they are organized into blocks that are chained together
– The transaction goes through!
WHAT IS A BLOCKCHAIN PLATFORM?
This is where things get really serious though: what is a blockchain platform and what is the difference between them! So, a blockchain platform is an existing chain infrastructure that users or developers can create blocks on. You can create smart contracts, programmable tokens, and most importantly NFTs!
There are public and private blockchains that differ according to the permissions behind them. An open or permissionless one is basically free-for-all! While private blockchains need special invites from certain nodes to enter. Cryptocurrencies and NFTs function on different blockchains that have specialized tokens!
Some of the best and most popular platforms and their respective tokens include:
– Solana (Click here)
– Binance Smart Chain
WHAT ARE THE BEST CRYPTOCURRENCY TO BUY
Finally, the last thing about understanding what is a blockchain is knowing how to make money on it. You can always learn how to buy and sell NFTs (check out this guide). Or, you can invest in cryptocurrency instead. Either way, you’re going to wanna have some crypto funds, to begin with. However, the number of cryptocurrencies is out-of-this-world-crazy! So, we’ve chosen the top 10 best cryptocurrencies to invest in this year!
– Bitcoin (BTC)
– Ethereum (ETH)
– Tether (USDT)
– US Dollar Coin (USDC)
– Binance Coin (BNB)
– XRP (XRP)
– Binance USD (BUSD)
– Cardano (ADA)
– Solana (SOL)
– Dogecoin (DOGE)