7 Blockchain Basics in Under 700 Words

Even if you’re brand new to crypto, you’ve probably heard of the Bitcoin and Ethereum networks. You may have even read about or interacted with Solana, Avalanche, Binance Smart Chain, Fantom, Cardano, and Algorand. On top of these more well-known blockchains, there are hundreds (thousands?) of other blockchains in the cryptoverse.

The blockchain is the core technological advancement that enables our web3 world. The blockchains most web3 users interact with share a number of core attributes. Among these attributes, the following seven blockchain basics are key to understanding what makes the blockchain so revolutionary.

Blockchain Is Built Upon Distributed Ledger Technology

Distributed ledger technology (DLT) underpins all we do in web3. At its simplest, a DLT is a connected group of computers existing in different locations that use various rules to maintain synchronous copies of the data across the network. Through these rules, called a consensus mechanism, data is added to the ledger. A blockchain takes DLT one step further by cryptographically recording data chronologically into blocks that are then chained together. Hence the term blockchain. A blockchain is essentially a cryptographically secured distributed and decentralized database of chronologically listed transactions.

Blockchains Are Transparent

One of the key features of blockchain technology is that the information recorded on them is transparent, meaning it’s available for all to see. While we in web3 connect to public blockchains and can view the transactions through front ends such as Etherscan, even private blockchains are viewable to those granted access to the chain. The transparent nature of the blockchain allows for simple things like users tracking their transaction history and more complex analytics such as those used to catch cybercriminals.

Blockchains Are Immutable

Powered by cryptographic hashing, which in its most basic sense is an algorithm that enables a secure digital signature, immutability means that once data is recorded on chain it typically cannot be changed or modified after block creation. In this way, the blockchain is also censorship-resistant. Once the information is on chain, it’s almost impossible to remove.

Blockchains Are Trustless

Enabled by the immutable nature of the blockchain, trustless refers to the fact that you don’t need an intermediary, a trusted third party, to broker transactions for you or to keep your assets secure. The trustlessness of the blockchain ensures that peer-to-peer transactions, which underpin much of what happens in web3, are seamless. Trustless can also extend to the idea of having self custody over your assets, an idea embodied in the idea of ‘not your keys, not your crypto’.

Blockchains Are Permissionless

The public blockchains that we interact with in web3 don’t require anyone’s permission to use, meaning there is no network administrator keeping you from participating in the network. They are open and ready for your wallet connection. With a permissionless blockchain, you can read and write to the blockchain, participate in the block creation consensus mechanism, or further build within the ecosystem.

Blockchains Are Distributed

It’s easy to confuse the terms ‘distributed’ and ‘decentralized’, but blockchains are both. Distributed refers to the idea that the computers that make up the blockchain network are located in geographically diverse regions - that is, the computers are in different physical locations.

Blockchains Are Decentralized

All blockchains exist on a spectrum of decentralization, meaning that while there is no single controlling computer or entity, some blockchains are more decentralized than others. Computers that make up the blockchain network each have a synchronous copy of the data that exists on the other computers and no computer or entity controls any other computers. The more computers running on a network, the greater degree of decentralization.

Key Takeaways

Although these key takeaways may seem very basic, these blockchain basics are what enable us to work and play in web3. Like the blockchain, our web3 education is really a series of building blocks on which we stack and link our knowledge. Having a basic grasp of the technology and beginning to understand how it all fits together is essential for a long and happy life in web3.

Hiro Kennelly is a writer, editor, and coordinator at BanklessDAO and the Editor-in-Chief at Good Morning News. He is also helping to build a grants-focused organization at DAOpunks.

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