Blockchain Simplified - Part 2

In the last installment in this series, we went over the fundamentals of the blockchain and cryptocurrencies. Let's pick up where we left off.

Double-spending and how the blockchain deals with it

Double spending occurs when the same currency units are spent more than once. It is a potential flaw and creates a disparity between the spending record and the amount of currency available. Blockchain prevents double-spending by time stamping the groups of transactions and then broadcasting them to all nodes in the decentralized network. On the blockchain network, all transactions are time-stamped, immutable and mathematically related to the previous ones.

?Smart contracts, simplified

A smart contract is a set of coded computer functions incorporating elements of a binding contract, intended to execute, control or document legally binding terms of the contract. The objective of smart contracts is to satisfy common contractual conditions such as offer acceptance, payment terms, liens etc., thereby minimizing the need for trusted intermediaries.?

The goal of a smart contract is to simplify business between two parties (both anonymous and identified) without any middlemen.?

?The benefits include a secure way of executing and managing agreements faster and cheaper than ever.

dApps - the next generation of applications

A decentralized application is known as a dApp. It can operate autonomously through smart contracts running on a decentralized computing blockchain system. It provides some functionality or utility to users like traditional applications.

?It operates on a blockchain or peer-to-peer network of computers, enabling users to engage in transactions directly with each another without a central authority or tech giant in between.

In short, a dApp combines a smart contract and a front-end user interface.

In the next few blog posts in this series, I'll cover the other use cases of blockchain. Here's hoping the common terms that we've covered so far were easy to understand!