Editor’s Note: This series of “ELI5” articles is for beginners entering the world of cryptocurrencies, DeFi, NFTs and Web3 with lots of questions in mind. ELI5 refers to the famous English acronym, which means “Explain me as if I were five years old”. The goal is not to infantilize the reader, but simply to give him keys to understanding, so that the cryptosphere’s complicated vocabulary in the broadest sense, as if by magic, becomes a child’s play!
That blockchain is an expression we hear more and more often. But exactly what does that equate to? What does this name refer to, the technological prowess for which we are constantly praised?
Do not panic, you have come to the right place here. To make it very easy for you to understand what blockchain is, we will explain this term to you as you would make a beginner.
A chain and blocks
Etymologically, the term blockchain is divided into “block” and “chain”. In French, this translates to block and chain, but English names are very often found on specialized French-speaking sites.
A blockchain, or a chain of blocks, is therefore a technology that allows different blocks to follow each other to form a chain. Each block is initiated (except the first) and followed by another, thus making it possible to trace the history of all the transactions that have taken place on a particular cryptocurrency.
Once a block has been accepted on the network and added to the chain, it cannot be changed subsequently. It is an operation that is qualified as immutable. This allows very practical applications such as authentication of certain documents or to prevent a cryptocurrency token from being used multiple times by the same person.
What does a block contain?
What a block contains varies greatly from one blockchain to another. The applications are several and it is not possible to list them all. This is all the more true since reading this article, other things will undoubtedly be recorded on a block. However, we will list two specific cases.
First of all, we can mention the transactions that have been carried out on the network. So if a user A transfers 1 BTC to a person B, we add this transaction in the block. This then makes it possible to know that the user has 1 Bitcoin less and that individual B has 1 more.
Secondly, we can talk about certain notary documents. For example, if you buy a house, it can be registered in a blockchain. Since it is no longer possible to change a block once it has been added to the chain, this guarantees that the house definitely belongs to the new buyer.
How to add a block to the chain?
In order not to go into too much technical explanations, we will have to make some simplifications. In order for a block to be added by the chain, it must be accepted by a majority of members operating the network. They are called miners whose blockchain operates under a Proof of Work (PoW) consensus.
Miners compete with each other to see who will add the block to the chain. Anyone who is able to solve very complex mathematical operations before others will have the right to add the block to the chain.
Sometimes it is possible for blockchain to be divided into two separate chains if miners do not have majority approval for a block to be created by one of their colleagues. But after a certain period, only the part of the chain that will receive approval from other miners will be considered as part of the blockchain and the other will be abandoned.
What can you gain by securing the network?
When you help secure the network, you earn rewards. For this, it is actually necessary to have quite powerful computer equipment and use energy. Few people are willing to do it on a voluntary basis, they do it because they can earn something.
In a PoW system like the one with Bitcoin, you can get rewards when you add a block to the blockchain. Every 15 minutes it is possible to collect a block reward, which amounts to 6.25 BTC (June 2022).
Some blockchains operate on a different system that does not require the use of computing power. The most common alternative is Proof of Stake (PoS), where you have to mortgage tokens. If we secure the network properly, we can earn project tokens. If we try to cheat, we lose.
Blockchain: what to remember
Blockchain is a term that can be translated into French by chain of blocks. It refers to the fact that many blocks are placed behind each other and thus form a chain. However, it is the English term that is generally used almost everywhere.
A block contains very important information that helps ensure the immutability of the network. This avoids the possibility of using the same token multiple times or irrefutably proves a deed that a person has.
There are several different ways to add a block to a chain. However, the two most common are PoW, where it is the first to solve a complex mathematical operation that can add the block, and PoS, where you have to pledge a certain number of project tokens to ensure the reliability of accountants.
Discover more crypto vocabulary concepts
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