Blockchain Basics

You will discover what blockchain is, how it differs from traditional databases, and why it is important for the future of digital transactions. Don’t miss this opportunity to get a quick and easy introduction to blockchain. Watch the video now!

What are Transactions in Blockchain?

In our last session, we delved into blockchain basics, exploring how they function and their core principles, including consensus mechanisms like Proof of Work and Proof of Stake. Today, we'll focus on transactions, the vital components of blockchains. Remember, a blockchain is a secure, decentralized digital ledger composed of blocks that record data like transactions and contracts. A transaction is simply an exchange of value or information on the blockchain.

Blockchain transactions function like a bank ledger, recording date, amount, sender, and receiver details. However, unlike a bank ledger that's updated and verified by the bank alone, a blockchain's ledger is maintained collectively by its users.

A blockchain is like a bank ledger, but with some key differences:

• A blockchain ledger is shared across its network, allowing open access and verification, making it tamper-proof.
• It updates by adding new blocks that link cryptographically to prior ones, ensuring an unchangeable, traceable record.
• Security is ensured through consensus mechanisms (rules agreed upon by the network to validate transactions) without a central authority.

What are the benefits of transactions on a blockchain?

Transactions on a blockchain have several benefits, such as:

• Transparency: Transactions on a blockchain are visible to everyone on the network, and can be verified by anyone. This creates a high level of trust and accountability among the participants.
• Efficiency: Transactions on a blockchain are fast and cheap, as they do not require intermediaries or intermediaries fees. This reduces the friction and costs of transactions, and enables new business models and opportunities.
• Security: Transactions on a blockchain are encrypted and validated by the network, and cannot be altered or reversed. This protects the data and the users from fraud, corruption, and cyberattacks.

What are some examples of transactions on a blockchain?

Transactions on a blockchain can be used for various purposes, such as:

• Financial transactions: Blockchain enables direct transactions like payments and remittances, exemplified by Bitcoin's intermediary-free cryptocurrency transfers.
• Smart contracts: Blockchains can automate contracts that execute on meeting set conditions, with Ethereum supporting decentralized apps through such contracts.
• Non-fungible tokens (NFTs): Unique digital assets like collectible items are created and traded as NFTs on blockchains, as seen with CryptoKitties.