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What is blockchain

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We hear about blockchain everywhere. It's the new hype, but what it is exactly?

Wait, I don't care, we are here to learn trading. You won't learn the depth of blockchain technology here, it's out of our scope.
I will briefly present what you need to know, so you understand what happen when you make operations on the system.

You can also call it a distributed ledger:

And voila! You can get currencies that are controlled solely by the laws of mathematics, breaking free from governments and central banks.

There is many blockchains, each being operated by their corresponding software.

Bitcoin has its own, Ethereum has its own, same for Litecoin etc...
However, Tron works on Ethereum's blockchain, Petro works on NEM's blockchain, etc...

What happen when you transfert numbers on a blockchain

This is the theoretical part. The practical side will be explained in the next class.

Let's say you want to transfer 1 BTC (one Bitcoin) to your friend Bob.
Both of you have a Bitcoin address:

On 15 March 2019, 9:10am Address Value
You 1EnJHhq8Jq8vDuZA5ahVh6H4t6jh1mB4rq 1
Bob 3Ftk1CQ2NcUaox4JqKRRWkGEM4sTDeEopH 5

You have 1 BTC, Bob has 5 BTC.
In reality, you don't have them on your PC: it's all on the blockchain.
What you have is the private key: it proves you are the owner of the address.

You send 1 btc on the 15 March 2019 at 9:15 am to Bob's address, your bitcoin client relay a mathematically signed transaction to the network.

The transaction itself gets dispatched to the ledgers: it doesn't simply update the values on the addresses.
It would look about like this:

On 15 March 2019, 9:10am Address Value
You 1EnJHhq8Jq8vDuZA5ahVh6H4t6jh1mB4rq 1
Bob 3Ftk1CQ2NcUaox4JqKRRWkGEM4sTDeEopH 5
On 15 March 2019, 9:15am Action
1EnJHhq8Jq8vDuZA5ahVh6H4t6jh1mB4rq sent 1BTC to 3Ftk1CQ2NcUaox4JqKRRWkGEM4sTDeEopH

Every action is registered. By deduction of every operation, final balances will be known.

The notion of confirmation

When you transfer bitcoins, most services will ask you to wait a certain number of confirmations before validating the deposit.
This is to make sure the transaction (TX) is not counterfeit, as anyone can send what they want to the blockchain.

The ones checking the authenticity of the TXs, are the miners: they are securing the network, and ask a small fee for this.
For Bitcoin, a new block is confirmed approximately every 10 minutes.

What is bitcoin confirmations

Enough for now!
Keep in mind our aim is to master trading, not the DLT (Distributed Ledger Technology).


Should you have any question or remark, feel free to post it. I will answer you as soon as possible!

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  Foreword Using a wallet