A legal deep dive into how Canada’s recent ruling on initial coin offerings could impact the market.
And many more investors, founders & technologists speakers…
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The blockchain is the technology that makes cryptocurrencies like Bitcoin possible. You do not need to understand it to use Bitcoin and other cryptocurrencies. It simply works behind the scenes for you. However, understanding it helps you KNOW why cryptos are safer and more trustworthy than “normal” currencies. This gives you confidence, the kind of confidence that only comes from knowing. So, let’s break it down, super simple…
Have you ever picked up a book or magazine, only to discover that a page is missing? That someone had ripped out a page?
I bet you have! We all have. And it is so annoying to discover that a page is missing, right?
How did you know that someone had ripped out a page?
Because of the PAGE NUMBERS! Maybe you were reading page 14, and you turned the page, only to realise page 15 and 16 are missing! Damn!
You didn’t need someone to tell you a page was missing – you could clearly see for yourself that the pages went from 12,13,14,17,18. Pages 15 and 16 missing. Simple! This is the first clue to how a blockchain works. A blockchain is simply a database that is organised like a book.
Imagine a database that works just like a book:
- A book has pages, a blockchain has blocks.
- A book has pages bound together sequentially from page 1, 2,3 and so on. A blockchain has blocks chained together from block 1, 2, 3 and so on.
- Now, if someone rips out a page in a book, you know it is missing because a page number is missing. If someone rips out a block from a blockchain, you know a block is missing because a block number is missing.
So far so good?
Now, the blockchain enhances its security even further by doing the following:
- Distributed & Decentralised Copies: The blockchain creates a copy of itself, and these copies are stored on thousands or millions of computers all over the world – from personal computers to corporate computers and all sorts of other devices. No one single entity owns all these computers. Even you and I can store a copy if we like, on our personal computers, and your copy and my copy will become an active part of the blockchain network
- Fool-Proof Audit Consensus Algorithms: This is so cool. To change the contents of a block in a blockchain, you MUST get the cooperation of more than 50% of the computers that have a blockchain copy. Don’t worry how this works for now, the point is this:
- Whenever a transaction happens, it is not considered official and final, until the blockchain system gets the OK from over 50% of the computers around the world, that the transaction is valid. Everything is audited to make sure that there is not a single mistake anywhere.
- If someone tries to fake or forge anything, they literally would have to hack 50% of the network to make a forgery stick. And that is an impossible task with even the most powerful supercomputers today. The network is simply too big. It would take about 0.5 billion years of trying to successfully hack this system of checks and balances, on all the thousands or millions of computers in the network, and the cryptography that protects them all. Even if you manage to corrupt a few computers, by the time you get to the next computer, the other computers that still hold a valid record will have corrected your hack. You would be running a race against time, a race that cannot be won.
- Permanent Time-Locks On Each Block: The blockchain is built such that only the newest block is open for editing. Once a block is about 10 minutes old, it is sealed forever. No one can edit it. Transaction history is preserved in a way that cannot be erased unless you destroy all the computers on Earth that have joined the network, because each block has a perfect copy saved on each computer in the network, and all computers keep confirming that each block is a perfect copy on all the computers.
- Mind-boggling Cryptographic Security Keys: You have a password on your Gmail. That can be hacked into by a determined hacker, within a matter of minutes, days, weeks, or maybe months, depending on how good your password is. But it can be done. However, the blockchain uses cryptography that has more possible combinations than there are all the grains of sand on all the beaches in the world! Impossible to guess! That’s why it would take more than 1/2 a billion years to crack.
- Transparency: The whole blockchain is open for public viewing. Each transaction is time stamped, and recorded on the blocks. The details of the owners of the transactions are not captured, so privacy is built in. However, the transactions themselves can be viewed by anyone, any time, using a browser (for example, click here to see for yourself). This gives it ultimate privacy, with ultimate transparency.
- Code Integrity & Transparency: The code itself, and of course all the rules and regulations of the currency, are hard-wired as part of the blockchain itself. This means that once created, they cannot be changed arbitrarily. Any major change must be approved of by over 50% of all users. Not all programmers, but all the computers (nodes) that host the network. Fool-proof integrity by a consensus algorithm. For example, for Bitcoin, there can only be 21 million Bitcoins in the system, ever. No one can change this except by mass consensus. This is completely the opposite with normal government fiat currencies, whereby the governments and private banks literally create new currency out of thin air daily, thereby creating inflation and loss of purchasing power, without consulting anyone. Additionally, the code is 100% open-source, transparent. Anyone can inspect the code, all of it, to make sure there are no hidden nasty surprises. Imagine that, full transparency, yet hack-proof. No secrets, except for the identities of the users.
- Content Integrity: Let’s talk about the contents of a page in a book. With a book, if someone changes something on the page, lets say a forger prints a copy of the book but changes the spelling of one word on one of the pages, and then gives you the book, it is nearly impossible for you to detect that small edit. However, with a blockchain, it is simple to detect and automatically fix even one letter or character being edited by a hacker. And that is part of the magic of the blockchain. Here is why:
- On a blockchain, the block number is generated from the contents of the block, and linked to the next block number! This means if even one character in the contents is changed, the block number changes, and it cascades and changes the block number on the next block and so on, and it invalidates the whole chain! And so the system knows right away if even one dot is changed! This, combined with the fact that the blocks are duplicated on thousands or millions of anonymous and autonomous computers all around the world and they verify each other all the time, and you begin to see why the system is called a trust-less system. It needs no central authority to maintain trust – it does it all by itself.
Here are some videos to clarify all this…
“… Bitcoin is better than currency …” says Bill Gates
After the announcement of Brexit on June 24th, all financial markets dropped. All? No! The value of bitcoin, a fully decentralized cryptocurrency, skyrockets.
Are cryptocurrencies the future of finance? Watch this video and find out.
Free Your Mind: Redefine & Demystify “Money”. (Plus See The Bitcoin, Ethereum, Cryptocurrency & Blockchain Big, Big Picture)
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This is a brand new channel created for you who want to learn more about cryptocurrency.
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Ameer Rosic is a serial entrepreneur, marketing expert, investor and a Blockchain, Bitcoin, Ethereum & Cryptocurrencies evangelist. Ameer is also a speaker and has spoken about blockchain at Mars and Western University, as well as a respected blogger in the blockchain field who has appeared as a commentator on sites like VentureBeat, Huffington Post, and so on.
Ameer Rosic has an ability to explain very technological things in ways that the masses can comprehend.
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