How Block Chains Work

Blockchain and
Cryptocurrency 101 for

beginners
A step by step explanation for people who wish to catch-up
with the new technology
- By Dave Partner
About Me
1. Programmer for 8 years - PHP

2. Crypto observer for 4 years
3. Crypto instructor and Investor 2 years
4. Youtuber:
Programming: youtube.com/c/braintemorg
Crypto: youtube.com/c/angrycryptodeveloper
Introduction to Blockchains
What is a transaction?
A transaction is an interaction between a user and the system.
Some examples of transactions in some social media platforms:

Facebook : Like, Share, Comment
Twitter: Tweet, Retweet
Github : Push, Pull, Merge
Bitcoin: Send money
What is a smart contract?
Also know as self-executing contracts, blockchain contracts, or digital
contracts. It was first described by Nick Szabo in 1996.
A smart contract, also known as a cryptocontract, is a computer program that
directly controls the transfer of digital currencies or assets between parties
under certain conditions.
Smart contracts not only define the rules and penalties around an agreement in
the same way that a traditional contract does, but also automatically enforce
those obligations.
A Smart contract
Smart Contract Resources
1. Smart contracts: the blockchain technology that will replace lawyers :
https://blockgeeks.com/guides/smart-contracts/
2. Wikipedia - smart contracts :
https://en.wikipedia.org/wiki/Smart_contract
3. Smart contracts for non-techies: https://hackernoon.com/blockchain-for-

non-techies-3-smart-contracts-104f77277297
What is a blockchain?
First proposed in a white paper by Satoshi Nakamoto in 2008.

A blockchain is simply a block of transactions chained together in a
chronological order.
Eg.
Transaction 1: Dave sends $5 to Emily at 5:00pm
Transaction 2: Dave sends $5 to Joan at 5:01pm
Transaction 3: Joan sends $32 to Cain at 5:03 pm
Transaction 4: Joan sends $3 to Cain at 5:03 pm
Centralized vs
Decentralized
What is Distributed Processing
A node (computer) performing a transaction on the network has to broadcast

the transaction to all the nodes in the network.
Each node in the network has to solve a math problem to verify that the
transaction is valid. Once verified, the node has to vote yes.
At least, 51% of the nodes on the network has to vote yes, for the transaction to
go through.
Nodes that verify these transactions are called miners.
A blockchain
A blockchain must always have coins
inbuilt because of the human factor of
needing incentives to do work.
What is mining?
Mining: Verifying transactions by solving math

problems, minting new coins.
Mining rig: a special computer used for mining.
Miner: Someone who owns a mining rig.
Anyone can own a mining rig.
Only 21 million bitcoins can be mined. So far

More on Mining
Types of Mining: proof of work vs proof of

stake
How profitable is mining?

Mining rig costs $1,000 - $5,000
Expected profit: $1 - $50 daily
It’s no longer profitable for individuals to mine

bitcoin, only large establishments with lots of
mining rigs. The mathematical problem a rig
has to do to mine bitcoin has become so large
that one small rig can no longer handle it.
More on Mining
Mining Resources
1. A Beginner's Guide to Cryptocoin Mining - Lifewire
https://www.lifewire.com/cryptocoin-mining-for-beginners-2483064
2. How to mine litecoins and dodge coins
https://www.lifewire.com/cryptocoin-mining-for-beginners-2483064
3. Cryptocurrency Mining: What It Is, How It Works And Who's Making Money
Off It https://www.howtogeek.com/211694/cryptocurrency-miners-
explained-why-you-dont-want-this-junk-on-your-pc/
What is Cryptocurrency?
Crypto : Digitally encrypted
Currency: A system of money
Cryptocurrency, is a form of digital money designed to leverage the power of

blockchains to be secure, trustless and anonymous. Cryptocurrencies are also
the reason blockchains work.
Bitcoin is the first cryptocurrency.
All other cryptocurrencies are called alternative coins or altcoins for short.
There are nearly 1,000 altcoins at the time of writing this.
What is Bitcoin and bitcoin?
1. Bitcoin is the first blockchain created from Satoshi’s white paper
2. bitcoin is the digital currency (cryptocurrency) built into the Bitcoin
blockchain. Bitcoin is the first cryptocurrency created in the world, it is also
currently the biggest by far.
For now, all blockchains have their own cryptocurrency. It doesn’t make sense
to build a blockchain without a cryptocurrency.
2009: 1 bitcoin = 2 cents

Jan 2017: 1 bitcoin = $700
October 2017: 1 bitcoin = $6,000
What is Ethereum?
1. Ethereum is essentially an improvement on Bitcoin.
2. It was proposed in 2013 and created in 2015 by Vitalik Buterin.
3. Ethereum is basically a shared computing platform that enables people to
create smart contracts and cryptocurrencies (altcoins) without having to
build their own blockchains.
4. Which means, Ethereum is a blockchain that has its own turing-complete
programming language to allow others build on it.
5. Ether is the cryptocurrency inbuilt in ethereum (people call it Ethereum)
6. To build on Ethereum, you need to have Ether.
2015 : 1 Eth = $1
2017 october: 1 Eth - $320
Cryptocurrency Resources
1. Satoshi Nakamoto’s white paper https://bitcoin.org/bitcoin.pdf
2. What is cryptocurrency?
https://www.buybitcoinworldwide.com/cryptocurrency/
3. What is Ethereum, what is ethereum mining
https://www.buybitcoinworldwide.com/ethereum/
What is a
1. There may be no hierarchy
Decentralized 2. Issues are voted on, 51% votes needed
Autonomous 3. Anyone can raise an issue
Organisation 4. Example of issues being raised are :
Amount of money to pay developers.
An organisation that lives on the Amount of money to go into research.
blockchain. Which staff to hire.
A DAO is run through rules encoded as 5. Anyone can be part of the organisation by
computer programs called smart owning a stake in it (coins)
contracts. A DAO's financial transaction
record and program rules are maintained 6. Here are some decentralized autonomous
on a blockchain organizations that you can learn about:
dash.org, steemit.com, ethereum.org.
DAO Resources
1. Some DAOs : Ethereum.org , Steemit.com and Dash.org
2. Wikipedia DAO:
https://en.wikipedia.org/wiki/Decentralized_autonomous_organization
3. https://www.dash.org/forum/
4. Apply for funding from Dash: https://www.dash.org/forum/topic/pre-
budget-proposal-discussions.93/
How they all work together
1. Dave Partner downloads a cryptocurrency 5. Multiple blocks are chained together thereby
wallet app, or signs up on a wallet website. Eg. making a block-chain. Each block has a unique
Remitano.com , Coinbase.com ID, time and a reference to the previous block.
2. Dave buys coins from a coin exchange site
eg. Poloniex 6. The miner that first validates the transactions
3. Dave sends 10 coins to Obama. in a pending block gets a few coins as reward.
That transaction is broadcasted into the The coins were created newly and just as a
network and is now pending validation by 51% reward to the miner.
of the nodes on the network.
4. So many transactions occur in the network at 7. Once 51% of miners verify a block, the
any time so all pending transactions are transaction is approved. The new block gets
grouped together into a block added to the front of the blockchain. Every
miner updates their blockchain record to
contain the new block
My next course is on
cryptocurrency
trading!
A step by step guide
to build your own
wealthy future.
Important Resources
1. Youtube : Subscribe to “Braintemple Tutorial TV” -
https://youtube.com/c/braintemorg
2. Facebook : Join “Cryptocurrency trading strategies “ -
https://web.facebook.com/groups/446166319077491/?ref=br_rs
3. Telegram : Join Cryptocurrency Trading Strategies -
https://t.me/joinchat/F5zy-w-Z469tvy1-7E5ECw
4. Chat me up for business: [email protected]
Thanks!
For donations:
Bitcoin:
3GtaocE8UUd9kFUn5fyXLGYuRt
F9CSBhjf
Ethereum:
0xb9bf0391ffcd46ac8d6ccb6e8
68f9e3d32cd9278

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Blockchain and

Cryptocurrency 101 for

1. Programmer for 8 years - PHP

A transaction is an interaction between a user and the system.

Some examples of transactions in some social media platforms:

3. Smart contracts for non-techies: https://hackernoon.com/blockchain-for-

First proposed in a white paper by Satoshi Nakamoto in 2008.

A node (computer) performing a transaction on the network has to broadcast

Mining: Verifying transactions by solving math

Mining rig: a special computer used for mining.

Miner: Someone who owns a mining rig.

Anyone can own a mining rig.

Only 21 million bitcoins can be mined. So far

Types of Mining: proof of work vs proof of

How profitable is mining?

It’s no longer profitable for individuals to mine

Crypto : Digitally encrypted

Currency: A system of money

Cryptocurrency, is a form of digital money designed to leverage the power of

2009: 1 bitcoin = 2 cents

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