Hello, in this lesson we are going to cover what is blockchain. So, what is blockchain have got a little arrow diagram right here. blockchain is the core foundation of many cryptocurrencies and a bunch of other platforms as well. The reason we have got a question mark here is due to the fact that most people when they think of blockchain, they think of cryptocurrencies, and on top of that, when they think of cryptocurrencies, they think of Bitcoin. This is the fearing logo. There are more than two cryptocurrencies.
And there are more than three different application for crypto for blockchain. Later on in this series, I will cover all the application for blockchain, but a lot of times I'll be referring to currencies in one form or another, but the process the ideology the philosophy behind blockchain is essentially the same. So what is blockchain? This amazing technology that powers most cryptocurrencies and powers Bitcoin, which, as of now, I believe is worth about the market cap for Bitcoin is about $70 billion. And it is growing immensely. So yeah.
Why is it so good? What is blockchain? The simple way to think of the simple way to think of blockchain is a database. It really is not much more than a database. And you might be thinking, well, databases have been around for a very long time before we had them in digital form. We had them in well written form in the form of, let's say, some sort of ledger or something else, especially in the finance industry.
And yeah, that's true. We've had databases for a very long time, and even in the digital realm, but databases generally have been centralized. And what that essentially means is one party on the database, they were the trusted authority for maintaining or updating. And also, we trusted that authority to make sure the transactions they were recording, whether they were financial transactions or otherwise, they were legitimately recording the transactions the way they had occurred. Whereas with blockchain block chain you This a this tree buted system, which is the centralized, I will create a whole nother video covering exactly what distributed and decentralized platforms are and how they compared to centralized platforms. But what these essentially means is no one entity has control over the transactions, and therefore it helps reduce the potential for hacking.
He helps reduce the potential for fraud. So whether that's legitimate or illage illegitimate problems with the system, it helps reduce that one word you might come across when you hear blockchain and Specifically cryptocurrencies like Bitcoin, but they're essentially referring to the blockchain is on hack a ball or tamper proof. I know that is four words. And though it is immensely difficult to hack blockchain when the application of blockchain and effective history has shown that anything that has bet the name on hackable tamper proof, it's secure to the point and can never be accessed has pretty much always in one form or another being proven false. So I would take this with a grain of salt soaked, that is meant to be a grain of salt. So yeah, our take with a grain of salt, because at the end of the day, it could potentially happen.
But as you advance through this course, you'll realize the immense complexity of trying to hack a blockchain based system. So as I mentioned earlier, blockchain is nothing more than a database, and you will hear the word ledger thrown around more than a database. But that's all it is. It's just a way of recording transactions. So imagine if we have this little ledger, this database, and we say person a sense 10 units of something was 10 pounds or $10 to Person B, and let's say Person B, send it To person C, they sent seven units of the same currency or whatever that unit is, we know that person a has 10 less. Now, Person B has 10 more now, and person c also has seven more now have missed out a step, which is Person B has seven less because they did transfer some money as also though they received it, they have transferred it as well.
So, that's essentially what a ledger or a database might look like. But with blockchain all of the users on the system, there are mining and will collect Exactly what mining is, at a later date, have a record of this advanced ledger database. So if one person wants to say, change this transaction, or let's say even remove it, if all of the others are saying this transaction did occur or didn't occur, as the case may be, then it would come to a majority vote and say the majority vote wins. And this did or did not occur. And as you can imagine, think about marking papers. So a mathematical paper four plus three equals seven.
A very simple math problem. But imagine if one person looked at a math paper and they had 100 questions to mark it is more than probable that an individual marking a single paper may get the marking wrong for one particular question. So they may say this is incorrect, even though it isn't it is correct, but imagine if 10 people were to mark the paper and nine said it was correct. And one one said it was incorrect. Based on this based on this from a statistical point of view, you can say that the norm All correct. And imagine if you just do this even further, instead of 10 people marking it hundred people 1000 a million people, and out of a million if only a few people are saying that this answer to this question is incorrect, you can say statistically speaking, it is not incorrect.
And those people for whatever reason, have made mistake whether they have maliciously done that, or they've just made a honest mistake. And that's the benefit of a decentralized distributed ledger. So it removes the idea of trusted third parties, which essentially come in the form of banks, whether that's using some sort of system like visa, pay, pal, Master, MasterCard, or anything else. So that's essentially what it removes each miner each person validating the transaction essentially almost becomes the verifier as these people would be or transactions or logs and the time that day the participants, so if person a summary to Person B, Person A and B will be the participants, the amount or what is actually transacted using blockchain is also re coded within the blockchain. Each node and system on the network owns a full copy of the blockchain. But like I said, miners are used to verify the validity of a transaction so minus minus verify the validity of a transaction slash and transactions are grouped into blocks.
So if we have this block this might have a bunch of transactions to think of it as financial transactions personation b person c sending money to person day etc etc. So this is a block and this block once it has been verified is added on to the Chain. So imagine if we have a block here it is added on to the chain. And when a number block has been validated, it is added onto the chain again and what you can do is go through the chain and see where all the transactions have come from how they've arrived. So imagine we have a a bank note a conventional bank note that is for and dollars. Realistically we do not know where this $10 has come from.
Maybe my parents have given me maybe my father handed it to me, but where did he get it from? Where did that individual Gary from etc, etc. Using blockchain? We can go all the way back back and see where he originally came from. And we can also see that he didn't initially start off as nice get rid of that Drori a little better. He didn't initially start off at $10.
It was a bunch of $1 transactions that eventually formed into $10. Maybe my dad received 10, one dollars from some from 10 different people, and he gave me the $10. Maybe he went to the bank, and he changed those 10 one dollars into a single $10 note, and that's what he gave me but I don't know that whereas with the blockchain system, it allows you to see the transaction of saving money in this case, where exactly it has come from and where it is going. And all of this is back Let me do the beat again at a very good backed by math Matic. You then use in hashing functions, miners verify hash values. So that's essentially a overview of what blockchain is.
In one simple word. It is a data base, nothing more, essentially nothing less. That is the best way to think of it. It is a distributed decentralized database will have several other videos covering mining covering what wallets are something that we haven't even talked about yet, how all of this process links together how cryptography comes into it in the form of hashes had the mathematics will be all work and how the security works. So stay tuned for those videos.