Understanding 5 relationships in blockchain in under 5 minutes
Hello everyone. Daniel here.
Cryptocurrencies such as bitcoins are becoming more and more popular.
But every time you look into it,
you find terms such as mining, blockchain, transactions
confirmation, hashing, digital signatures, private key, hard forks,
addresses, BIP39, nemonic phrases
What do all those stuffs mean?
And how are they related to each other?
let me explain
Ok so to explain everything,
we are going to use an analogy of operating a restaurant.
as you know,
All restaurants have managers to make sure things are running smoothly right?
Well, how do we create a restaurant
that doesnât need mangers to overlook everything?
letâs find out
First, we will need some cooks.
These people have invested a lot of money
to buy big ovens and using a lot of electricity to run them.
in the crypto-world, we call these people miners,
and instead of cooking up food, they are cooking up blocks.
For more explanation on how they do that,
see my video about mining.
For now, just understand that they are responsible
for making the block or âfoodâ in our analogy.
next, our restaurant needs to have some customers
so that the food will be eaten and the business can run!
Some customers will want pork and some will want chicken.
You can think of these people as users
and some will prefer to use bitcoin while others prefer to use ethereum.
Regardless, understand that these end users â useâ or âtradeâ the blocks
which in our analogy is eating the food
Now that we have people who demand the product,
we need a way to exchange those products with each other
and with other things we own.
This would be the cashier in our restaurant.
They also do delivery of takeout to people not physically present in the restaurant. This is like sending money to your relatives in another country.
Next, when your company realizes it can order a lot of food from the restaurant
for the next company team building event,
this is catering.
In our crypto-universe,
we have companies such as music-streaming company Spotify
using blockchain technology built on ethereum
to make their services more efficient.
Lastly, we come to the recipe makers for our restaurant.
we call these people the developers who code better technologies to make our coins more widespread.
They fine-tune our food so that the cooks can cook it easier,
the cashier can sell more,
the consumers eat more,
and that the businesses buy more.
Alright! Hopefully you have a better understanding of the relationship
between these groups of people
who together make blockchain networks operate.
But what happens when these groups donât agree with each other?
In the next few videos,
I will explain the causes for some of the recent events happening in the crypto-world so you can be better informed moving forward.
Stay tuned for videos every week,
comment your feedbacks
and join in the conversations.
May all your coins moon and all fiats stay flat.
Stay safe guys.