Blockchain In 7 Minutes | What Is Blockchain | Blockchain Explained|How Blockchain Works|Simplilearn
Summary
TLDRThe script explains the concept of blockchain technology, using an example of four friends splitting a dinner bill. It highlights issues with traditional bank transactions, then introduces cryptocurrencies and blockchain as a solution. It explains how blocks record transaction details in an encrypted, tamper-proof chain. It also covers blockchain concepts like distributed ledgers, mining, and public/private keys. The script describes how blockchain brings transparency to supply chains, using Walmart as a real-world example to track and improve product quality.
Takeaways
- 😀 Blockchain provides a way to complete transactions without banks/third parties
- 👥 Blockchain transactions are recorded in an immutable public ledger shared among users
- 🔑 Public and private keys enable secure transactions on the blockchain
- ⛏️ Transactions are validated and added to the blockchain through a process called mining
- 🔗 Blocks in the blockchain are linked together, containing transaction details and account balances
- 😄 Blockchain brings transparency and accountability to supply chains like Walmart's
- 🌟 The bitcoin network uses blockchain technology to enable a cryptocurrency system
- 🔐 Blockchain data is protected through encryption algorithms
- ❌ Invalid blockchain transactions will not go through due to the shared ledger system
- 🤝 Blockchain enables peer-to-peer transactions without central authority
Q & A
What is blockchain technology and how does it work?
-Blockchain is a distributed ledger technology that allows recording transactions and tracking assets in a secure, transparent, and decentralized manner. It works by grouping transactions into blocks, linking them together to form an immutable chain using cryptographic principles.
What problems can arise with traditional bank transactions?
-Bank transactions can fail due to technical issues at the bank, hacked accounts, exceeding daily transfer limits, or extra fees and charges. This leads to delays and lack of transparency.
How do cryptocurrencies solve the problems with traditional transactions?
-Cryptocurrencies use blockchain technology so they are decentralized and don't need a central authority. They use encryption for security. The public ledger provides transparency while cryptography prevents alteration of records.
What is mining in the blockchain context?
-Mining refers to the process where participants validate blockchain transactions and group them into blocks. Miners need to solve a complex math problem to add a block. The first one to solve the problem adds the block and receives a bitcoin reward.
What are the two keys used in a Bitcoin transaction?
-The two keys are: 1) Public key that is publicly known like an email address 2) Private key that only the owner knows, used to digitally sign transactions to prove authenticity
How was Walmart able to improve their supply chain using blockchain?
-Walmart used blockchain to permanently record the state of goods at each point in the supply chain. This transparency helped identify problem areas when issues arose instead of refunding customers.
What are the advantages of blockchain technology?
-Key advantages are decentralization, transparency, immutability, enhanced security, reduced costs, faster transactions, automation through smart contracts.
What is proof of work in blockchain context?
-Proof of work refers to the complex mathematical problem that miners need to solve to validate a block of transactions and add it to the blockchain.
What are some real-world applications of blockchain beyond cryptocurrencies?
-Some applications are supply chain management, healthcare records, property records, digital IDs, voting system, royalty distribution system for creative works.
What are some popular cryptocurrencies other than Bitcoin?
-Some other popular cryptocurrencies are Ethereum, Litecoin, Ripple's XRP, Bitcoin Cash, Binance Coin, Tether, Cardano, Polkadot.
Outlines
😊 Introduction to Blockchain
The first paragraph introduces the concept of blockchain as an alternative payment system that solves issues like failed transactions, additional charges, and security breaches faced in traditional bank transactions. It explains how cryptocurrencies like Bitcoin use blockchain technology to enable direct peer-to-peer transactions without requiring a central authority.
💡 How Blockchain Works
The second paragraph provides an in-depth explanation of how blockchain works using a transaction example between friends. It covers concepts like distributed ledger, mining, proof of work, public/private keys, hashing algorithms etc. involved in adding transaction blocks to the blockchain securely.
Mindmap
Keywords
💡Blockchain
💡Cryptocurrency
💡Bitcoin
💡Ledger
💡Mining
💡Hashing Algorithm
💡Public Key
💡Private Key
💡Supply Chain
💡Smart Contracts
Highlights
Cryptocurrencies use blockchain technology and are immune to counterfeiting, don't require a central authority, and have encryption protection.
Blockchain is a collection of records linked together that is resistant to alteration and protected by cryptography.
Each blockchain user has a public key that acts like an email address and a private key that acts like a password.
Transactions details are encrypted using algorithms and the sender's private key to digitally sign the transaction.
Different cryptocurrencies use different hashing algorithms like SHA-256 for Bitcoin and Ethash for Ethereum.
Miners validate transactions and add blocks to the blockchain by solving complex math problems, and are rewarded with cryptocurrency.
Adding a block to the blockchain through the process of solving math problems is called mining.
The concept that ensures blockchain data cannot be altered is the public distributed ledger.
Walmart used blockchain to identify problems in their supply chain by tracking quality at each step.
With blockchain, Walmart could pinpoint where damaged products occurred in the supply chain.
Blockchain has many real-world applications beyond cryptocurrency.
Blockchain allows permanently recording transactions in an immutable ledger.
Failed bank transactions led to the creation of blockchain and cryptocurrencies.
Bitcoin is the most widely used cryptocurrency built on blockchain technology.
The blockchain ledger is shared publicly among all users of the network.
Transcripts
ever wonder if there's an easier way to
complete transactions without having to
deal with online wallets banks and
third-party applications well it's
possible thanks to blockchain here's
everything you need to know about
blockchain imagine four friends jack ted
sam and phil meet up for dinner after
they're done jack pays the bill and all
of them decide to split the expense
amongst each other now on the next day
when phil sends his share to jack via
online money transfer the transaction
goes through without a hitch then ted
and sam send their respective shares to
jack but their transactions don't go
through the failed transaction cites
some issues at the bank that's when jack
comes to know about the many ways a bank
transaction could fail it could be due
to technical issues at the bank one of
their accounts were hacked daily
transfer limits being exceeded and
sometimes additional charges like
transfer charges associated with
transferring money to solve these
problems the concept of cryptocurrency
came into existence cryptocurrencies are
a form of digital or virtual currency
that run on a technology known as
blockchain thanks to blockchain
cryptocurrencies are immune to
counterfeiting don't require a central
authority and are protected by strong
and complex encryption algorithms and in
a market of more than thousands of
cryptocurrencies like litecoin ethereum
z cash and so on one reign supreme
bitcoin now let's go back to our
previous example and have phil ted and
sam send jack two bitcoins each as their
contribution to the previous night's
dinner let's assume phil ted and sam
have three bitcoins in reserve while
jack has five first phil sends two
bitcoins to jack a record is created in
the form of a block the transaction
details between them is permanently
inscribed in this block this record also
holds the number of bitcoins each of the
friends own so after phil's transaction
jack has seven bitcoins while phil has
one following this sam and ted send two
bitcoins to jack a new block is created
for each of these transactions these
blocks hold the transaction details as
well as how many bitcoins sam ted and
jack have in reserve these blocks are
linked to each other as each of them
takes reference from the previous one
for the number of bitcoins each brand
owns this chain of records or blocks is
called a ledger and this ledger is
shared among all the friends which acts
as a public distributed ledger this
forms the basis of blockchain so what
happens when phil has only one bitcoin
left and he tries to send two more
bitcoins to jack the transaction will
not go through this is because all his
friends have copies of the ledger and
it's clear that phil has only one
bitcoin left his friends will flag this
transaction as invalid a hacker will not
be able to alter the data in the
blockchain because each user has a copy
of the ledger the data within the blocks
are encrypted by complex algorithms all
of this is made possible with the help
of blockchain technology blockchain can
be described as a collection of records
linked with each other strongly
resistant to alteration and protected
using cryptography now let's have a
closer look at the bitcoin transaction
between jack and phil and find out how
it works every user in the bitcoin
network has two keys a public key and a
private key the public key is an address
that everyone in the network knows of
like an email address of a user the
private key is a unique address that
only the user has knowledge of something
like a password first phil passes the
number of bitcoins he wants to send to
jack along with his and jack's unique
wallet address through a hashing
algorithm all of this is part of the
transaction details these details are
encrypted using encryption algorithms
and using phil's unique private key this
is done to digitally sign the
transaction and to indicate that the
transactions came from fill this output
is now transmitted across the world
using jack's public key with this the
message or transaction can be decrypted
only by jack's private key which only
jack has knowledge of different
cryptocurrencies use different hashing
algorithms while bitcoin uses the
sha-256 algorithm ethereum which is also
a famous cryptocurrency uses one known
as ethash
this transaction and several other
similar ones are taking place all around
the world these transactions are
validated and then added block by block
the people who validate these blocks are
called miners
for a block to be validated and added to
a blockchain miners need to solve a
complex mathematical problem the miner
who solves this first adds the block to
the blockchain and is rewarded with 12.5
bitcoins the process of solving the
complex mathematical problem is called
proof of work and the process of adding
a block to the blockchain is called
mining
with this phil and jack's wallets are
updated just like every person in the
network who has completed a transaction
now that you know about blockchain and
its important concepts time for a small
quiz what is the concept of blockchain
that ensures data cannot be altered by
any of the users within the network a
public distributed ledger b
proof of work
c
proof of stake d
hash encryption let us know what you
think is the right answer in the
comments below three lucky winners will
get amazon gift vouchers details are
mentioned in the description below let's
have a look at how walmart uses
blockchain to provide its customers with
better service walmart was facing
problems in delivering quality products
to its customers they were facing a high
return rate and large amounts of refunds
due to their products bad quality they
were unable to determine the point of
failure in the supply chain which
started from farm to storage to
transportation to processing all the way
to the customer then walmart adopted
blockchain technology with blockchain
the quality of the goods at each step
was permanently inscribed within a block
for example when a customer flags a
product as damaged it can be correctly
identified where the product got damaged
in the entire supply chain thus helping
walmart to identify the problem areas
and fixing them and this is just one of
several ways blockchain is used in real
life applications can you think of any
others let us know in the comments down
below that's all for now thank you for
watching and stay tuned for more
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