What are cryptocurrencies?
After defining what a blockchain is, how it differs from DLT technology OF cryptocurrencies, how the validation process of a block works. Some of the most common consensus protocols that represent the heart of any distributed database. Let’s move on to more strictly than cryptocurrencies. However, we will try to do so from a purely technical point of view and a philosophical point of view, questioning ourselves on concepts such as “value” and “money.”
Let’s establish that the definition of cryptocurrency is not something to be taken for granted. Although Bitcoin has existed for ten years and has given life to a real ecosystem around it. We have not yet been able to find a commonly shared definition of what a cryptocurrency is.
Just take a tour on the web to check how each of the protagonists of this world (the major developers, university professors. CEOs of companies operating in this sector, etc.) has had the opportunity over time to provide their definition of this word. Without the emergence of the one capable of making everyone agree ON cryptocurrencies.
Consequently, I will provide my definition of what a cryptocurrency is, taking care of. However, to warn the reader that what will follow is not the singular definition of what cryptocurrencies are. Therefore, after a few years of reflection, I came to define a cryptocurrency as “a unit of data whose origin it is possible to establish with certainty. Who owns it, and to which it is possible to attribute a value conventionally accepted by anyone.”
To understand well what we are talking about, it will be necessary to give concrete examples. We have already mentioned how it is possible to follow every BTC transaction through websites (explorers.). If we search for “explorer bitcoin” on Google, one of the first results is the “blockchain.com” site, which shows us a screen that lists the succession of the last validated blocks. Clicking on any block, we can view information such as the number of transactions it contains. The progressive number that identifies the block (i.e., the height of the block itself ). The total value of the transactions it contains.
A blockchain is nothing else than a book.
A blockchain, in other words, is nothing else than a book that tells a story. More precisely, the story it tells is that of the chronological succession of all the transactions processed. And validated by the network. I could easily do it today. In practice, we would have a coin that corresponds to the ownership of a specific car, and on that coin, we would write all the car’s data (make, model, year of registration, etc.). The owner’s data (year of purchase, purchase price, name, etc.). On the day the car was sold to a new owner. He would also receive the relative cryptocurrency on which he would be added.
What we need to do, therefore, is to stop imagining a cryptocurrency as a dollar bill. And start imagining it instead as a small box. In that small box, you can put any information, and at that point, you can also exchange the information with a third party and attribute a value to it. When we talk about BTC, each coin is like a small box that contains information.
What is the information we are trading when we trade a BTC?
The information we exchange is the most essential of all, the right of ownership over that box that we exchanged. When I send a Bitcoin from my address to another person's, the information that is stored on the blockchain is that that coin (not another, not any of those in circulation, but exactly that coin) ceases to be owned by my address and becomes the property of a new address. How can we be sure of the unique ownership of the coin? Because we have its private key. We will deal with this concept, and others equally important, in the following Article.
What interests us to note is that each block has a weight?
What interests us to note is that each block has a weight, the maximum weight, but it would be better to speak of "maximum size." Generally speaking, a BTC block (just to give an example) is 1MB. Within each block, we find the data relating to each transaction. Among the data available to us, we have the block within which it was validated, the number of confirmations received, the timestamp, the weight, the size and much more.
Why am I writing all this?
Because on the blockchain we go to archive data, and that data can be anything. It can be for example a medical record of a patient, the right of ownership in a car, or whatever else we can think of. Currently, if we take the example of BTC, the data we choose to record in the blockchain is transactions..