Blockchain 101: Understanding the Basics

Hello there! Welcome to the vibrant world of blockchain technology, a revolution in the making. No matter your background, whether you're a tech-savvy individual, an investor, or just a casual reader intrigued by all the buzz, this guide is your key to understanding the basic concepts of blockchain. And, who knows? You might even end up holding your very first blockchain tokens by the end of our series. So buckle up, and let's dive right into the core of this fascinating world!

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What is Blockchain? "Explain it like I’m five"!

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To ease you in, let's use a fun analogy.

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Imagine you have a magical LEGO chain. Every time you and your friends do something together, like trade stickers or swap toys, you add a LEGO piece to this chain. Each LEGO piece represents what you did, like a tiny memory. For example, the cookie you gave your friend last week, or the football he lent you yesterday,... The magic part? All your friends have the exact same LEGO chain at their homes, and it grows at the same time as yours, automatically! So, if anyone tries to add or remove a piece without everyone agreeing, it becomes obvious because their LEGO chain looks different from everyone else's. This means nobody can cheat or pretend something didn't happen, because the LEGO chain remembers everything and everyone can see it. The blockchain is like this magical LEGO chain. It's a special list that keeps track of things and ensures everyone is honest.

An Explanation for "Grown-Ups"

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After looking at this kindly little example, let's have a closer look at what blockchains are, in more technical detail - and clarify what benefits they can bring.

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At its core, a blockchain is a digital ledger. Picture a large book where every transaction or record is written down, but this book isn't made of paper - it's made of code and lives on hundreds and thousands of computers all around the world.

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Blocks & Chains

Everybody around the world can submit transactions directly in to this digital ledger. Every time there's a new record (like a transaction), it's added to a 'block'. A block is a collection of transactions. Each block has a cryptographic hash of the previous block, which is what links the blocks and ensures the chain’s integrity. Once this block is full, it's linked to the previous block, forming a 'chain'. Hence, the term "blockchain".

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Transparency & Immutability

Since everyone participating in the blockchain has access to the ledger, it ensures transparency. Once a transaction is added, it is technically impossible to change or delete it, making the system extremely secure. If someone tries to alter a block, it would disrupt the chain, and everyone would know something's amiss.

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Consensus Mechanisms

For a new block to be added to the chain, the majority of participants must agree (or reach a consensus) that the transaction is valid. This ensures that all transactions are approved by the collective, further enhancing security. To achieve this, the globally distributed computers perform complex mathematical techniques in the background. Examples for this are "Proof of Work" and "Proof of Stake". ONINO is developing their own consensus mechanism, "Proof of Adaptive Coverage" (PoAC).

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Smart Contracts

Think of these as software coded into the blockchain. This software does not live in a central server (which could easily be hacked or controlled), but is hosted globally, on every computer in the blockchain network. Smart Contracts can self-execute when certain conditions are met, eliminating the need for intermediaries and ensuring trust. A real-world example for this would be a smart contract that releases funds once a job is done.

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Decentralization

Unlike traditional records or databases that are stored in a single location (like a central bank), blockchain's ledger is distributed across many computers. 

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Decentralization: A Break from the Norm

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The idea of decentralization is fundamental to blockchain technology. In the 'normal world,' we are used to centralized systems. For instance, banks control our financial transactions, governments issue and manage identities, and social media platforms own our digital interactions. With blockchain, these central points of control are eliminated. It's like having a village where every villager has a say on the matters of the village, rather than having a single mayor making all the decisions. This means that no single person or entity has complete control, and everyone can verify the records - leading to a more open, fair and self-sovereign internet,

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Transparency and Security

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In the world of blockchain, transparency and security are not just buzzwords, they are baked into the very fabric of the technology. Every transaction made on a blockchain network is visible to all participants of that network. Imagine a glass bank where every transaction is visible to everyone, yet it's more secure than any vault or safe. How so? The transactions are encrypted using complex mathematical procedures that only the designated recipient can decrypt.

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Immutable Records: Unchangeable, Unforgeable

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Once a transaction is validated and added to the blockchain, it cannot be altered or deleted. This is akin to writing a sentence in an ink that cannot be erased or overwritten. The result is a permanent, tamper-proof record of all transactions. Data stored on a blockchain can simply not be tampered with. In a world where data breaches and identity theft are rampant, blockchain offers a beacon of hope. Immutability is important, i.e. in order to prevent fraud or ensure the integrity of a supply chain.

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The Journey Ahead

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Well, you've made it through your first steps into the vast universe of blockchain technology. But trust us, there's so much more to explore. In our next post, we will delve into the "Potential of Blockchain: Use Cases Beyond Value Transfer." From empowering artists through Non-Fungible Tokens (NFTs) to enabling transparent governance through Decentralized Autonomous Organizations (DAOs), we'll uncover the real power of blockchain technology.

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Here at ONINO, we're crafting our own story with the ONI token on our own blockchain network. Stay tuned as we walk you through the fascinating world of blockchain coins, currencies, and tokens, set up your first crypto wallet, navigate crypto exchanges, and explore the use of the ONI token.

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Remember, this is not just about understanding blockchain; it's about being part of a revolution. See you in the next post!