BlockShots: Blockchain Simplified

In the last episode I spoke about blockchain scalability and how sharding is one of the ways to achieve that. In this episode, let’s do a double click on blockchain execution sharding. Sharding, in general, is a term associated with traditional databases. When a database grows too big, it could be divided into smaller databases across several servers based on some property of data. For example, a...

Some of you must have seen on the internet that how Bitcoin and Ethereum and much slower than Visa and other centralized financial systems. The reason is blockchain scalability trilemma. Bitcoin and Ethereum have chose to be more secure and decentralized, and hence they have to give up scalability. In the last episode, I spoke about the Blockchain Trilemma. About how blockchain could have only two...

Blockchains are decentralized networks where all the data is stored and verified by all nodes. To make blockchains usable for real world use cases, they should process large amounts of data. But when all nodes have to process all the data for each block, it is not easy to process a lot of transactions quickly. Blockchains are also public and permission-less networks, hence it is critical that they...

Blockchains are basically peer to peer networks of nodes. The chain progresses when majority of the nodes or peers agree on the state of the blockchain and the validity of the next block. What happens when these nodes don’t agree or when they misbehave? In a network of nodes, there could be a situation that some of the nodes are either offline, or under an attack, or just not functioning as expect...

The user or DApp composes a transaction with information like input parameters, cryptographic signature, and some metadata about the blockchain network and a serialized data object is created out of it. All of this happens outside the blockchain using Wallets or DApps. Transaction Submission This serialized transaction data is then sent to one of the blockchain nodes using the RPC API. Transaction...

Blockchains are peer to peer network of nodes. These nodes connect with each other and come to consensus on the state of the blockchain. All these nodes are basically computers running the blockchain node software. Let’s look at all the components of a blockchain node that come together to make it all possible. * Storage: This is the most basic component of the blockchain node. This is where the s...

Blockchains form consensus when all the nodes agree on the data they process. This depends on the condition that the computation at each node should be deterministic. That means each node should arrive at the same output, for a particular set of inputs, no matter what hardware they are using.  The deterministic nature of blockchain logic ensures strong consensus. For this reason, blockchains work...

Blockchains are decentralized systems and are relatively slower than the centralized distributed systems. This is because decentralized systems have each node processing all the data so that they could not be hacked or influenced by a single point of control or failure. Processing all the data by all the nodes also makes things slow. In order to still make use of blockchains and decentralized syst...

Decentralized systems are fundamentally different from distributed systems. While in distributed systems we can add more servers to handle more load, we cannot do that in decentralized systems. Also, because distributed systems have a single point of control and failure because they process the data only at a single node. Decentralized systems don’t have that shortcoming because all nodes in the n...

Blockchains allow seamless and transparent distribution of tokens and these tokens can represent pretty much anything. It can be something of a financial value, identity, or right to vote that can be tokenized on the blockchain. Recall that to update the state of a blockchain, users send signed transactions, and based on the validity of these transactions the updates are applied to the blockchain....

If we look at the dictionary definition of the term fungible, it says “ being of such nature or kind as to be freely exchangeable or replaceable, in whole or in part, for another of like nature or kind. ” https://www.dictionary.com/browse/fungible Let’s take an example. If you have a 1 dollar bill, you can exchange it for another 1 dollar bill. When we deposit cash in a bank and then withdraw some...

Exchanges allow users to buy, sell, and exchange cryptocurrencies. Just like we have stock and forex exchanges for buying and selling shares and foreign currencies, similarly we have exchanges for cryptocurrencies. In general, crypto exchanges allow buying and selling of cryptocurrencies using fiat currencies or stablecoins or other cryptocurrencies. For example, you can buy bitcoin using USD and...

Cryptocurrencies are generally volatile. There are several reasons for that — low liquidity, speculation, and several other factors. There could be more reasons, but generally speaking, cryptocurrencies have been relatively more volatile compared to fiat currencies. This volatility does not help with the value transfer use cases of cryptocurrencies. If the price is not stable, the value transferre...

Central bank digital currencies broadly refer to the digital versions of fiat currencies. The fiat currencies are issued by the central banks of respective countries. These currencies are issued based on the economic conditions and needs for trade and commerce in a country. Previously, the fiat currencies were issued based on gold reserves. The process of minting and maintaining these currencies r...

Financial services are generally based on transfer of funds between parties. For example, when we borrow money from banks that money is deposited by someone. They earn interest for depositing their money, and we pay interest on the loan. The money moves between the depositor and borrower through the bank. On a larger scale, many people deposit money at the bank and the bank then lends that money t...

Decentralized Finance is more of a field comprising platforms, standards, and applications focused on providing financial services using decentralized technologies. Generally, when it comes to traditional financial services, we deposit savings, borrow money, buy insurance, etc. Most of the time we interface with financial institutions that govern the terms and and conditions of these services. The...

Every transaction in a blockchain is signed by the sender. The signing of transactions is done using cryptographic signing algorithms, as described in episode 6 of the podcast. In some scenarios, to perform an operation on the blockchain, there is a need to have more than one signatures on a transaction. Think of bank accounts with joint holders. Similarly, blockchain wallets could also be owned j...

One way of doing crowdfunding for software projects is an Initial Coin Offering , better called ICO. In blockchain applications, the developers create tokens so that their users can spend them to use the application. Selling these tokens is a way for the developers to get paid for their work. Let’s understand more in this episode. This is a public episode. If you would like to discuss this with ot...

Tokens are digital assets representing a user’s right to use a system/service/application or to participate in a process based on blockchain. Tokens are similar to cryptocurrencies in terms of issuance and distribution, but they are different in terms of value. A cryptocurrency can be used as a medium of exchange, while a token has only utility or security value. Let’s understand more in this epis...

In this episode, we understand what is proof of stack consensus and how it compares with proof of work. Proof of Stake (PoS) is a blockchain consensus algorithm where the nodes put an economic value on stake to participate in block production. The problem domain is the same — to find out who should produce the next block for the blockchain. This is a public episode. If you would like to discuss th...

In this episode, we understand what is proof of work and what it solves. We also understand how and why it is used in blockchains. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

In this episode, we understand the problem of double spend in digital currencies and how it impacts blockchains too. We also look into how blockchains solve double spending. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

In blockchains, the transaction fee is the fee paid to blockchain nodes to include the transaction in a block. Generally, the transaction fee is paid in the native cryptocurrency of the blockchain. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

In this episode, we continue understanding the blockchain economics concepts and dive a bit deeper into the crypto-economic rewards. Let’s understand what node operators and validators get in return of their services and why. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

In this episode, we cover the most basic aspects of blockchain economics. From the need for cryptocurrencies to incentives to stakeholders, let’s explore it all, in brief. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net