“Bitcoin is a remarkable cryptographic achievement and the ability to create something
that is not duplicable in the digital world has enormous value” –
Eric Schmidt, CEO of Google
3 years of
At the beginning of 2017 we started to research, invest and investigate in blockchain space. At the time we saw blockchain technology and cryptocurrencies real potential and impact in the future and its real world use cases. Since then we have gained tons of experience and knowledge to operate on the blockchain space. In that on mind we have created Lucreds Blockchain website to help others to operate on the field.
Top 6 pros
Blockchain technology is not a silver bullet.
Ask yourself, how does it improve you?
Centralized vs Distributed vs Decentralized
What’s the difference?
Decentralized systems run completely without a central point of authority and control. Instead it is up the network to make it own decisions regarding what is true and false and thereby control itself.
A decentralized system is more democratic than a centralized system because there is no central authority, instead the system is controlled by its users.
A big hosting company can be an example of a distributed computational network. They probably have servers all around the world serving their customers and splitting the workload among them. All the traffic doesn’t go through a single server like in the centralized network, but all the decision making, authority and control is still maintained at the core of the hosting company.
In a centralized computing network, all the calculations are done on a particular computer/server. This is for example a classic web server running on a basic computer. A centralized system can be easier to run and maintain with central authority that controls it. It’s more vulnerable for take downs and hacks, because it has one central server that controls everything.
Bitcoin uses the blockchain to store information about transactions of bitcoin between people. Every transaction is linked to previous transactions in the blockchain, utilizing the linkage between the blocks.
By letting an entire network handle security, there is no central point of attack for hackers in order to get hold of passwords or private keys. Instead we create a network of huge redundancy where it doesn’t matter if a few nodes in the network gets taken down, the network would still be secure. With that being said, we can’t have too few nodes securing the network either as that would increase the risk of for example a 51% attack, which you will learn more about later on.
The public key allows users to receive bitcoins. Many people believe that the bitcoin address and the public key is the same. This is not true, but the are related on a mathematical level. Because the public key is so long (65 bytes), the address is a shorter, hashed version of the public key.
The public key is created using the private key and the public key is then used to create the bitcoin address.
The private key is used to sign transactions and is what allows bitcoins to be spent. Therefore it is of importance that the private key is kept secure at all times and not shared with untrusted parties.
A private key is always mathematically related to the public key and the bitcoin address, but because of the strong encryption it is practically impossible to reverse-engineer.
If you lose your private key, it is impossible to access your bitcoin wallet and send funds.
Networks like bitcoin are completely driven by market forces. Which means that the miners usually will pick the transactions with the highest transaction fees. That’s because those transactions would give the miner the most profit from their work.
When the mempool grows the transaction fees go up. This is because there is a larger competition to get your transaction into the next block. Large mempool leads to long waiting times and some people are willing to offer larger transaction fees to the miners in order to get their transaction picked first. The mempool is really only an open marketplace, where people compete around who’s transaction is going to be picked first.
The most popular
Ethereum uses the blockchain to store information about the applications running on the network. The blockchain network keeps track of the execution of code and what states all the applications are in.
When you have control over your private key you have total control over your coins. When you store your coins in any other way you hand over final control to a 3rd party. Many people use online wallets and exchanges to store cryptocurrency. This puts their private key in the hands of the corporation running the site and exposes their keys to greater risk of hacking and fraud.
There are also security risks when storing your own private keys. Make sure to store them on a hardware wallet or some other cold storage option for maximum security.
A full node holds the entire blockchain while a SPV only holds parts of the blockchain. In short, SPVs validates their own transactions without worrying about anybody else’s transactions. This may sound problematic, because their is a chance that a block is invalid. But almost never a problem in reality, because SPVs are connected to many different nodes that can make sure that we all agree on the same chain of blocks.
Learn more about
Blockchain & Cryptocurrencies
The course is for everyone who wants to get deep understanding of the blockchain tevchnology. Whether you’re an investor, entrepreneur or developer. Courses have been built with practical exercises. Every course have it’s own test questions.
Reach out to us if you
have any question.
And keep in mind
Blockchain isn’t a Silver Bullet!