A Skeptic’s Dive into Crypto Pt. 2 What is the Blockchain?

Finmeme Associates
3 min readMay 6, 2021

If you didn’t read the first in the series, you can do that here. It was a good place to start if you know nothing about cryptocurrencies and why people are excited about them. Now we are moving on to the blockchain, because It wouldn’t make sense to talk about cryptocurrency without talking about the blockchain. We are not going to go in-depth on the technical side of it, we are not qualified to do that, however we can give you a breakdown of what it does pretty easily.

The Blockchain:

The blockchain is a database that stores information in, well, blocks that are chained together in chronological order. There are three key concepts one must understand about it:

  1. Blocks — where the data is stored. The block contains a nonce which is a 32 bit whole number that is generated randomly and a hash which is a 256 bit number wedded to the nonce.
  2. Miners — they create new blocks through mining. Their job is to use a ton of computing power to solve the incredibly complex math problem of finding a nonce that generates an accepted hash.
  3. Nodes — these can be any kind of electronic device that maintains a copy of the blockchain. Any newly minted block must be approved by the network of nodes.

The Hype:

Now you are probably thinking why is everyone getting hyped about a database that stores transactions?

There are a few reasons why everyone is getting hyped:

  1. Decentralized — there are thousands of computers and individuals that help run the blockchain where data is stored on the computers, called nodes. The nodes are the backbone of the blockchain and either accept or reject new transactions records being added to the chain.
  2. Irreversible — once a transaction takes place it is set in stone. No one can go back in the timeline and change anything.
  3. Transparent — anyone can view the history of the nodes. This is beneficial because if your wallet is hacked and the bitcoin stolen, it can be traced easily.

Now you are reading this thinking all blockchain is public, but that is not true. There are private blockchains that companies use because it is a great way to store information. The only difference is that only those within the company have the ability to view what is stored on the chain.

There are also other benefits as well besides transactions: property records, medical records, supply chains, etc. It is starting to change the way industries store information and we will see more companies taking advantage of it in the future.

Additional educational material:

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Investopedia

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