What are BLOCKCHAIN, WALLET and MINING? (Part 2/5 tutorial for beginners)

These terms are often mentioned in cryptocurrencies. In short, blockchain is the technology on which are cryptocurrencies, the wallet is an application where cryptocurrencies are "stored", and mining is the name for a process that confirms transactions in the cryptocurrencies network. I will now clarify it in a little detail.

BLOCKCHAIN

 

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Blockchain, is basically a database in which all transactions have been stored ever in the network of some cryptocurrencies. When a transaction is carried out, it is grouped together with a lot of other transactions, and they are stored together in so-called block. Transactions are nothing other than records that person A sends to person B some amount of money. A set of such grouped records (blocks) are mathematically confirmed.

All confirmed (verified) transactions since the beginning of the cryptocurrencies history are written in the "main book" that we call "blockchain". Individual transactions merge into blocks and a block transaction is confirmed together. After the transaction is confirmed, the block binds to the previous blocks. Since the blocks are cryptographically linked, no previous block can be changed, and all the blocks after it are changed. The identity of the person in the transaction is encrypted, so reading the database can not directly identify one's identity. Someone can only use one code, just one address, and can thus unlock his identity.

The blockchain is a database in which the records of all the transactions that have been made so far and are not in one place, but distributed: each one has a copy that is regularly updated, ie synchronized among all computers in the cryptocurrencies network.

WALLET

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Wallet, is the name for applications we use to use cryptocurrencies. These are mobile apps or desktop applications. There are all operating systems, all kinds of cell phones. They are very similar to those applications you use for online banking and are easy to use.

 
Are cryptocurrencies stored in a wallet? Does this mean that if I delete the application that I will lose money? 

Answer to both questions is: no. Cryptocurrencies ​​are not stored in the wallet. Since there is no database where it says how much cryptocurrency people have in their accounts, but it's just calculated based on your transactions. If you know all the transactions someone has done, you know how much the account has in the end. So you know how much money you have, and because of the way you set up the database (blockchain principle), you can not change it and disrupt one's account amount. Therefore, cryptocurrency is not stored in the wallet (app), but is calculated based on previous transactions associated with your account that are stored in the blockchain mentioned above.

If you deleted the app, you could still access your money by using the so-called private key that you enter during the first application launch. Based on the private key, the transactions that belong to you are mathematically determined so you can see your account balance.

Wallet is the name for a variety of database-linked apps (blockchains) that then determine all your transactions based on a private key, and then calculate the current account balance. It allows you to send and receive money from other people, and look like ordinary mobile or PC applications for internet banking.

MINING

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Mining is a term related to the way in which a transaction is confirmed in a network. Transactions must be confirmed in order to avoid the inclusion of fraudulent transaction records. Confirmation of Transactions is a complex mathematical process carried out by computers called miners, and the process of confirming transactions is called mining. Mining burdens the computer processor and consumes a lot of electricity to confirm some transactions. Also, on the miners' computers, a blockchain is stored, and each computer has its own copy.

Who are these miners and why would they do it if it's consuming a lot of energy? What if the miners change the blockchain, ie the amounts in the accounts?

The miners are every person who decides to install special mining programs on their computer. There is a lot of miners and are spreaded all over the world. Blocks of transactions are confirmed by mining. Each time a miner approves a block, he gets rewarded with a certain amount of cryptocurrency. This amount is newly created, and it is determined by multiple parameters and is calculated by complicated mathematical expressions. The system is so directed that the cryptocurrency over time gets value and that there is never inflation; first because there is no central institution that would put the currency into the system, and second because the software was so programmed.

The second question is whether miners can change the amounts in the accounts? No. Blockchain, the database containing all the transactions ever made, is stored on a large number of computers around the world. If someone decides to change the information in the blockchain, it's checked if this information is identical to all other computers in the network. And according to the majority rule, for this information to be accepted, these changes must be present on at least 51% of all other computers in the same space, literally to the last letter / number / character. If someone intended to cheat and manipulate the system, more than half of the world would have to do the same.

Mining is a process that confirms transactions and stores them in blockchain. Miners are computers that have special programs installed for this process. As a reward, miners are rewarded with a certain amount of cryptocurrency, which is mathematically determined. This ensures the predictability of money laundering and avoids the possibility of inflation.