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Bitcoin and Blockchain 101

Most of us are familiar with our country's currency (insert your countries form of currency: USD CAD, JPY, GBP, CNY) wether it is physical or digital we are willing to exchange goods and services for it. For centuries, people of earth have relied, and trusted a third party to hold, and transfer, their currency. From the ancient templars escorting precious metals across the globe on behalf of others, or exchanging them for ancient bank notes; to bankers as we know them today holding our money. As society has advanced, so has the banking system.

In the digital world, we have become use to instant access. Instant access to whatever news organization happened to get their hands on a story first followed by a flood of other sources, even if the original is incorrect. Instant access to photos, and status updates. Technology is wild. Hell, last year I was watching kids enter the augmented reality of Pokemon Go on their phone as my girlfriend and I walked the streets of Burlingame, CA.

With all these technological advances, comes something else: Blockchain. A term that is almost impossible to dodge in this digital revolution, and the next steps Fintech is taking as a way to eliminate the trusted third party.

Blockchain is built on three technologies; Private Key Cryptography, p2p Network, Program (blockchains protocol). These three technologies are a way of removing a trusted third party so no one person/group controls the information. With this, we have a master ledger, where all transactions are recorded.

In a simple form, we have a network of computers constantly listening, and keeping a record of transactions on a ledger. 

Example: Person 1 says they are sending .05 Bitcoin to Person 2; the network of computers verifies that person 1 has .05 Bitcoin, sends it to person 2, then verifies person 2 receives .05 Bitcoin, and records the transaction to the ledger. 

Transactions continue to be added to the ledger until the block is full, in which it is added to the chain and a new block is started.

That is a simple form of the Bitcoin Blockchain.

*This ledger cannot be tampered with, if we have a rogue computer that is trying to fool the network of invalid transaction, other computers with receive the rogue computers request, compare it with their ledger, and realize it is invalid.

follow me on twitter @postmattern and @bitfuturist

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