Summary of WTF Is the Blockchain?

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Rating

8 Overall

8 Applicability

8 Innovation

9 Style


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The terms “bitcoin” and “blockchain” flooded headlines after the value of the cryptocurrency more than tripled in the fourth quarter of 2017. But if you are not a currency trader or a technology expert, chances are you may not be fully familiar with their underlying concepts. Mohit Mamoria, the CEO of cryptofund Authorito, helps laypeople understand blockchain in this easy-to-follow blog post on Medium.

In this summary, you will learn

  • What constitutes a blockchain, 
  • How the blockchain eliminates the need for a broker to process money transactions, and
  • Which incentives the bitcoin network uses to encourage participants to keep the system going. 
 

About the Author

Mohit Mamoria is the CEO of the cryptofund Authorito Capital.

 

Summary

Conventional money transfers depend on third-party intermediaries, such as banks, to process and verify the transactions. If you want to transfer $1,000 to a friend, you ask your bank to deduct the amount from your account and add it to your friend’s account. However, if the third party that completes the transaction is corrupt or makes a mistake, or if the file with your account balance is destroyed, you will have little recourse to recover your money. The blockchain does away with the need for a broker. It contains records of bitcoin transactions. Each blockchain participant maintains a current record of every other member’s account. If members want to transfer money to someone else, they let everybody in the blockchain network know, so each member can document the transaction on a digital sheet called a block. Once a block is full, the members will try to incorporate the block into the main record of accounts, called the blockchain. To do so, the block needs to be sealed.


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