An introduction to blockchain

Blockchains consist of a database, which stores the transaction header and data. All the servers that participate in the blockchain, collect and operate a copy of this database. The servers are called 'nodes'. Most blockchains are trustless, which means that anyone can start a node to support and strengthen the blockchain without any intervenence of a central entity, hence, blockchain is called a decentralized network.
Nodes have the task to read and write transactions to the blockchain database. The database is by nature synchronizing between all participating nodes. Because nodes obviously burn electric energy there needs to be a rewarding mechanism to secure and write transactions. This is created with a coin or token, that belongs to the blockchain. Nodes get rewarded with fees, which are paid by the users of the blockchain.
Users that make use of the blockchain, can send transactions to one another. User applications to store coins/tokens are called wallets.

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At the time of writing this website, blockchain is still in it's infancy of the lifecycle. The usecases of blockchain need to evolve in time, but right now blockchain brings us;

• ​payments
  Also known as cryptocurrencies. People can send and receive payments with digital money. Most famous cryptocurrency is Bitcoin

• smart contracts
  With a blockchain you can couple a contract to a coin or a transaction.
  The smart contract is like a paper contract, which defines rules and actions that need to be obeyed. So, with cryptocurrency you could define for example a smartcontract that if the day is monday or wednesday and you received an X amount of token Y, then you transfer an equal amount of token Y to specific receivers.

• crowdfunds (ICO/STO)
  Crowdfunds/investment offerings can be easily executed on a blockchain. When company assets are coupled to a token, investors worlwide can participate easy

• energy trading
  Various projects started to trade energy in a peer to peer fashion. Connect participants together on a blockchain, without the need for a middleman.

I would say, Blockchain is very secure. Why is that? Let's talk about money and value first. Security of a bankaccount is composed of various items, like username/password, 2FA and encryption. But what we mostly forget is the level of centralization which determines a lot. We are highly dependent on goverments and banks and the people that work over there. Our data is stored in their datacenters. If goverments decide to print extra money, the value of money is inflated. You need to pay more for the same product then before.

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Some crypto currencies do not have inflation. It's from day one secured how many coins belong to a blockchain. If demand rises, value rises. The best example is Bitcoin. Lost of people speculate that it can only increase in value on the long term.

Other blockchains have an inflating model. These have a fixed % of inflation and can be only changed if all nodes agree. This is a fundamental difference in the way the traditional banking model works.

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With blockchains, a user has a public key and a private key. These are very long strings used to access and encrypt/descrypt data, to long to memorize. As long as you are the holder of the private key, you are in control of blockchain transactions. It's generated when you create a blockchain wallet. Afterwards, you can safely store it, even on paper if you like.  You would only need it to restore your wallet or import it on another device.

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Blockchain is one of the most reliable and secure technologies because it's impossible to change data once it's written to the blockchain. Tampering with user data is impossible. That is different compared to centralized databases where administrators or other individuals could be able access data and change or steal it. With blockchain, you are in control cause you are the owner of the private key.

There are hundreds of blockchains out there in the field. The most familiar one is Bitcoin. Not all blockchains have the same capabilities, scaling and performance. They also differ in the way the nodes burn energy and get rewarded.

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Ethereum and Waves are two blockchains which can execute smartcontracts. Looking at the performance, Waves has a significant magnitude higher for it's transactions/secs than Ethereum. Both blockchains can also carry tokens on top their technology, which opens doors for deveopers to run their own usecase.