Beginners guide to crypto

Posted by Max on November 2, 2018 in Blog | Leave a comment

Bitcoin, crypto and distributed ledger technology (DLT) are hot topics.  Very simply there are all just a form of a database which stores data in a very secure way.  They do this using in a fundamentally different way to historical databases.  The two main differences are:

• Where the data is stored
• How the data is encrypted

Storage.  In DLT the data is stored across multiple locations (nodes) in public or private computers, instead of one (or a few) locations.  The real benefit of this that it is highly resilient against disaster and attack, as you need to gain control of over 50% of the nodes to disrupt or compromise the network.

Encryption.  In DLT the data is encrypted based on all previous transactions, rather than by just applying encryption algorithms when data is stored.  This approach to the encryption means that in order to break the system, you need to unencrypt all previous transactions before the next transaction is made.

As a result of these two strengths, DLT is a great way to reliably store data.  However, there is a downside.  Due to data being stored in multiple locations and the type of encryption, it can take a long time for transactions to be recorded on to the ledger. While work is being done to improve the time it takes to confirm a DLT transaction, it is still too slow for many ‘high volume’ or ‘low latency’ applications (like credit or debit card transactions).

This explanation is a bit of a simplification, for more detailed understanding there are some great resources below.

👀 Blockchain Demo is a visual explanation of the blockchain
🎙️ Blockchain Curated covers the best crypto articles in a podcast
✍️ Token Daily covers all the breaking crypto happenings in a newsletter
🎒 Cryptoeconomics will teach you about token economics
👶 My First Bitcoin is a children’s book about crypto from Square