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Explain Blockchains, Cryptocurrencies Like I'm Five

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Cryptocurrencies and Blockchain are getting huge spotlight from last few years.

I googled, read some articles but couldn't understand how these things actually work.

I want to understand how Cryptocurrencies and Blockchains actually work!

Thank You πŸ˜€

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Those are different things.

  • A "blockchain" is a decentralized way to store data. Basically, all participants keep a copy or, at least, a hashsum of the "database" on their computers. Every time a new dataset ("transaction") is added, it will be based on each previous transaction. (This is why Bitcoin transactions are taking so long to complete.) If any inconsistency is detected between the various participants (usually, many of them will have to "confirm" a transaction before it is considered valid), it will be dropped. (This is the ELI5 explanation. Technically, more things happen.)
  • Cryptocurrencies are Ponzi schemes, using blockchains to achieve their "goals".
 
 

Yes, you can. If you have enough computing power, that is.

 
 

Tux0r gave a good explanation on blockchains and summed up my own feelings on cryptoCOMMODITIES pretty well, but a little bit more info about what makes a crypto commodity different than a regular one.

First, a quick term: a "Ledger" is the term for a copy of the database/hashsum of the database of the transactions

  1. Each member of the blockchain has a "wallet" this is the ledger that says how many coins belong to each wallet (including itself)
  2. solving a complex computational problem allows you to add coin to the wallet (this is generally done automatically using bitcoin mining software)
  3. any transaction between wallets is done by confirming that the transaction is possible by asking the number of ledgers. Different coins are set up differently, but I believe that Bitcoin uses a simple majority of ledgers.
  4. The transactions are "anonymous" because the wallets are not personalized
 

The best way I've seen cryptocurrencies described are "Imagine if you left your car idling overnight so it could produce fully solved sudoku that you can use to buy heroin"

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