CHAPTER 1
Blockchain Basics
This chapter will serve as your ground school before you “take off”
toward development. It will introduce basic concepts that will help you to
understand the blockchain technology. This chapter is split into four parts.
– Introduction to Cryptoeconomics
– Blockchain Explained
– Cryptocurrencies Overload
– Blockchain P2P Network
To understand cryptoeconomics, you first need to understand
concepts such as encryption and decryption, private-public keys,
cryptography, digital assets, cryptography, and cryptocurrency.
Once you understand these basic concepts, I will cover blockchain.
I will cover the pieces that make up an individual blockchain, such as
blocks, and how the blocks are linked together, as well as the problems
with blockchain such as double spending. I will also explain cryptomining,
cryptominers, and cryptocurrency wallets.
Then, I will cover the different types of cryptocurrencies: bitcoin,
tokens, and alternative cryptocurrency coins (altcoins).
Last, I will cover the P2P network that is used with the blockchain
technology and the different layers that make up the network: consensus
layer, miner layer, propagation layer, semantic layer, and application layer.
Introduction to Cryptoeconomics
The world of crypto is full of technical jargon that can confuse even
the savviest technology ninja. Bitcoin introduced the concept of
cryptoeconomics and paved the way for the creation of many blockchain
platforms. Before we dive deep into how a blockchain works, let’s
understand what cryptoeconomics is and the underlying concepts behind
a blockchain.
Verbal communication is based on selecting words to describe
a message you want to convey. However, sometimes you want to
communicate with only certain people while excluding others. A good
example is during wartime; a commander communicates with soldiers
stationed on the front line while ensuring the enemy is unable to listen.
The commander could use encryption for this communication.
Electronically speaking, today all shopping sites offer their
merchandise over an encryption protocol, called Secure Sockets Layer
(SSL), that can protect your personal information from hackers. Video
encryption and decryption are common to ensure the delivery of video to
authorized members only, and on personal computers, people often use
encryption to back up and protect files and passwords.
Moreover, as a developer, you likely sent encrypted messages and also
decrypt incoming messages with the help of libraries as all programming
languages offer string encryption and decryption functions.
So, let’s look at some definitions:
– Encryption: Encryption is a process of converting your
message into code so that only authorized parties can
access it.
– Decryption: Decryption is reversing the encryption
process so that the message can be converted to the
original message.
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