2024-12-07 at

I explained cryptocurrencies to my dad

 ( Yet another note, so matter of testing different ways of saying the same thing to different audiences. )


Recap of how blockchains work : 

  • 1. at the root : the basic data structure is a distributed ledger ... a complete record of the history of something, given to a number of different parties in a network
  • 2. consensus protocols : changes to the ledger are submitted to a certain number of parties ... and the parties must agree, to some majority, or the network fails to function
  • 3. cryptography : using cryptographic hashes makes the ledger cheaper to check
  • 4. cryptocurrencies : the ledger is used to store the records of a currency's unit creation, transfer, and destruction
  • 5. smart contracts : the ledger is used to store computer code that be executed upon the meeting of certain criteria
  • 6. governance : some cryptocurrencies carry voting power, like shares in a company, within the rules of their protocol
  • 7. incentives : in exchange for computing power, parties in a network may be rewarded with units of the network's currency
  • 8. The extrinsic value of cryptocurrencies ... like the extrinsic value of shares in a company ... is not tied to the internal functions of the cryptocurrency's network. 
    • - If Apple's stock price goes to zero, operations of the company are not internally affected. 
    • - Likewise the price of bitcoin is only a measure of the faith of the world in the value of bitcoin, in terms of USD or other currencies.

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