What is Blockchain

good morning, today we are going to talk about

blockchain

, the reason why we are going to talk about it is that we need to create a common language in all business and technology on this topic. Albert Einstein once said that if you can't explain it, you simply don't understand it. is pretty good, today's goal is to explain it in a simple way so that everyone understands it well enough, so the first thing we need to understand are two basic terms: Bitcoin and

blockchain

. Bitcoin is a digital currency, it is money, which is digital, we are not going to talk. about this Bitcoin in this talk we are going to talk about blockchain blockchain is a technology with which Ena moves coins or digital assets from one individual to another individual it is very important to understand that Bitcoin is not blockchain, it is important to understand it in our common language because I heard that compliance people say: "Oh, we can't talk about Bitcoin, maybe because it has a bad reputation, but about blockchain we should and can talk well, so after we understand the basic terms of Bitcoin and blockchain, it's time to address the problem of blockchain attempts.” to solve and the problem is the transfer of money I am going to explain it at a conceptual level and the same for Bitcoin I am only going to focus on the concept I am not going to go into the implementation details of how it is done in practice The important thing there is which to keep in mind is only as a concept, so nowadays if person A wants to move money or transfer money to person B, say from Israel to Japan, this is usually done using a trusted third party and it usually works. as follows, first of all, I say I want to move the transfer to B and instruct a third party to transfer money to B.

The trusted party because it is trustworthy, identify B in your fund, identify that person and the account bank and then move the money after charging a fee to the correct account in Japan, this usually takes around 3 days or more, but it takes some time. What blockchain is trying to solve is to first make the money transfer without the trusted entity in the middle so that people can talk to it. each other, the second to do it faster than 3 days, actually immediately, and the third to do it cheaper than the fee the third party charges, so let's dive into how blockchain addresses this money transfer problem.

The first principle we are going to talk about. It is an open ledger concept and I am going to illustrate this concept using an example. Let's say we have a network of four people who really want to transfer money to each other and let's say it's on Genesis at Inception. of this network a has $10 from the beginning now let's look at the concept of the open Ledger and how it is being implemented in the blockchain let's say that a wants to move to B$5

what

is going to happen is that we are going to add a transaction Move to B $5 and we will link it to existing transactions already in existence.

Then let's say b wants to pass D $3, so we'll do the same thing, we'll link another transaction on The Ledger to the chain. that says b moves to D $3 finally if you want to move $1 from D to C again we will do the same process D moves to see $1 and link it to The Ledger to the open Ledger, well this is the concept of open Ledger . It is essentially a chain of transactions and this is one of the reasons why it is called blockchain. I'm not going to talk about the blocks. These are implementation details that we'll leave aside for a moment, but this is a transaction chain that is open. and public for everyone,

what

it gives us is that everyone on the network can see where the money is, how much money each person has in their pocket, first and second, everyone can decide if a transaction is valid or invalid, for example, if now you try to move $15 a um a C, everyone on the network can immediately see that this is not a valid transaction because it started with 10 and moved to be another five a you don't have $15 and this transaction will not be added to the open account uh this The transaction will not It will be part of the chain.

Now we can move on to the second principle of blockchain. See we have a centralized place now that we run The Ledger, but remember that the goal of blockchain is to get rid of centralized PL, so the second principle is a distributed system. Ledger, which means that the blockchain is going to test the centralized and distribute it across the node in the network, which means that D, for example, can have a copy of The Ledger and can store it on his node. You can do the same and have a copy of The Ledger and anyone else participating in this network can contain The Ledger can contain the chain of events that happen.

Now what we have is that The Ledger is distributed and we essentially no longer need the centralized place that contains The Ledger. We achieved the goal, we got rid of the centralized trust part, however, we created another problem or a new problem now, when there are multiple copies of The Ledger on the network, we need to make sure that all these copies are synchronized and that all participants on the network they see the same copy of The Ledger, the same version of The Ledger and this leads to the third principle of blockchain, which is probably the most interesting.

We already understood that The Ledger is open, everyone can see it. The Ledger is distributed across multiple nodes, uh, and now. What we need to understand is how, in these types of distributed ledger nodes, they understand and synchronize a ledger with each other. Let's do it using an example. Let's say B wants to move C to $5, which B is going to do. is going to post and broadcast this intended transaction to the network, everyone on the network will immediately see that b wants to move $5 to C this is an unvalidated transaction that is not yet entering The Ledger in order to enter The Ledger we need to understand the concept of miners in Bitcoins.

Miners are special nodes that can contain The Ledger. In this case let's say that d and a are miners. The miners will do the following. Miners will compete among themselves to see who will be the first to take this. unvalidated transaction and be able to validate it and put it in the ledger. The first minor to do so will obtain a financial reward, in this case Bitcoin, let's try to understand what it means to win the competition to be the first in power. To take the transaction and add it to the General Ledger, a minor must do two things, the first thing he must do is validate the new transaction.

This is easy. The General Ledger is open and you can immediately calculate whether B has the funds to make the transfer. This is easy, the second thing a minor needs to do is find a special key that allows this minor to perform the previous transaction and lock this previous transaction in the new transaction to find this key that this minor needs to invest. computational power and time because this search for the key is random, the minor repeatedly guesses new keys until he finds the first key that matches this type of random riddle, the first to do so we will get a financial reward, let's see how the ledgers are synchronized over the network, a minor was able to solve the puzzle and be able to take this transaction and add it to his own ledger.

What you are going to do now is publish the solution to the entire network to broadcast it to the entire network, which means it will say here you are in a validated transaction and here is the lock, here is a key that allows everyone on The Ledger to the network, sorry for taking it and adding it to your own Legends, which all the miners are going to do. For example, we see that this transaction is already validated and can be added to the General Ledger, which means there is no point in trying to resolve this transaction and get a reward.

We'll immediately take this transaction, add it to your own General Ledger, and look for another one. transaction to work on and hopefully get the reward next time let's try to summarize what we do or what we did or what we learned we try to explain how blockchain works we learned that blockchain is not Bitcoin these are two different things we learned that blockchain is based on the basic principles of the fact that the ledger is open and public so that everyone can view and validate transactions the fact that the ledger is distributed and essentially exists on many nodes in the network eliminating dependency on third parties we learned about the concept of the miners who are special nodes in the network that the RO goes to to validate transactions and add them to The Ledger, we mentioned the fact that the economic incentive of the miners essentially guarantees that they collectively agree on which are the official ledgers that should be used by We need to remind everyone and I really ask you to remember that this explanation is very simplistic, it is only about the concepts and ideas behind blockchain, the implementation itself is much more detailed and complex and probably answers many questions that They already have it, thank you. you a lot