A guide of Blockchain for newcomers.

A guide of Blockchain for newcomers.

By Snow Under Sun | SnowUnderSun | 13 Jul 2020


What is Blockchain?

It is a distributed database that provides encrypted transaction tracking. 

If I give an example, I can simply explain the blockchain concept with Google documents, one of Google's most used products.

Google documents allow multiple users to fill in the same Word document and store it on multiple computers at the same time. Since it is stored on different computers, the fact that any computer leaves the system does not harm that document. Different people can still access the same document. This actually refers to the dispersion in the definition of complex blockchain.

At the same time, when we say blockchain, there is transparency. Since these documents are in the hands of different people, different people can access and read these documents at any time without any trouble.

 

The other thing I should explain is the concept of "the chain" in the blockchain. 

This is related to the size of the blocks. Block size is something that can be a sensitive topic for Bitcoin because perhaps the biggest controversy in the Bitcoin community is those related to block size.

 In 2017, a group that wanted to increase the block size of Bitcoin increased its block size to 8 MB by forking its own Bitcoin and developing its own blockchain.

 In Bitcoin, the block size is 1 MB. Once a block in Bitcoin is full, data begins to be written to a new block (that is, a new document in like a google document). When a document is full, writing a new document begins. These transitions between the blocks are also connected to each other by a chain and form a chain, thus creating the blockchain.

 

What is Centralized, Decentralized and Distributed?

A distributed system depends on the location of the serving servers. If there are hundreds of interconnected computers on different continents, this is an example of distributed structures. The fact that a structure is distributed does not make it central or decentralized.

 

If the connected computers in different locations are controlled by a single company, these systems are called central distributed structures. If these work entirely with a peer-to-peer structure, not with the server-client model, then it can be said to be a decentralized structure. So whether it is central or not is not about the software architecture of a system, but whether there is a clear decision-making authority over that network.

 

For example, when Facebook was first established by Mark Zuckerberg, it served from a single computer in the dorm room in Harvard Uni. But today, it serves using a fully distributed structure from nearly 200,000 computers spread across different continents. Facebook can delete users' shares, freeze their accounts. In this case, users do not have any say on their data. For this reason, Facebook is as central as the first day. It is a "distributed centralized" model.

Companies such as game servers, Google, Twitter, Amazon also use central and distributed systems.

 

Are cryptocurrencies, dApps, blockchains and DeFi apps really decentralized & distributed?

Is "decentralized" word is a definition of a blockchain or a dApp or a DeFi app or a cryptocurrency out of the authority of governments, tax offices et cetera? Absolutely not. Of course, it brings relatively freedom and less costs but frankly I can not count as "decentralized" 

Examples:

Bitcoin had a fork which indirectly means a new team separated from previous team and set their own parameters on a "revised" blockchain and rules. If somebody which called "team", set parameters, is it can be decentralized?

Ethereum will have 2.0, working model since beginning is Proof-of-work, which means that you should mine ETH to earn ETH. 

With 2.0, Vitalik and dev team will change it to Proof-of-Stake, which means you should stake ETH to earn ETH.

Vitalik Buterin and developer team decide this. If something decide by a small team, rather than decide by community, how can we say that it is "decentralized"?

- Defi ( Decentralized Finance ) : Carry significant potential to reduce costs, accelerate transactions and remove bureaucracy. I supported DeFi apps on blockchains too. 

On the other hand, every DeFi app created by a founder and developers. They decide and manage everything, not by the community. If the community does not have hand on decision making, how can we say DeFi ( Decentralized Finance ) apps are " decentralized? 

 

Let's look to other side of mirror, Doge Coin had creator and developers but they stopped interest to Doge long time ago, its blockchain working properly without any management. Community driven but still on pre-defined parameters.

 

When we will see the decision-making handle by community majority for blockchain outputsand community decision apply by developer servants in details, it can be called as purely decentralized blockchain. Question is community how much qualified to define right outputs in a blockchain tech?


Snow Under Sun
Snow Under Sun

A westerner in Thailand. Previously,13 years Sales Executive in a Forbes 500 company and 6 years HR executive in a multinational company. Crypto trader since 2015.


SnowUnderSun
SnowUnderSun

A westerner in Thailand. Crypto trader since 2015. Previously Sales Executive in a forbes 500 company.

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