What are ‘cryp­tos’ and the blockchain?

AQ: Australian Quarterly - - BLOCKCHAIN AND THE STATE -

Imag­ine a dig­i­tal web, much like the in­ter­net; a global net­work of peo­ple’s com­put­ers act­ing as nodes in the Bit­coin uni­verse.

You de­cide to send 1 Bit­coin across the in­ter­net to a friend. Un­like a real coin, a Bit­coin is a dig­i­tal string of numbers and let­ters that carry with it ALL the in­for­ma­tion of every trans­ac­tion it has EVER been in­volved in.

You trans­fer your Bit­coin to your friend, much as you would with In­ter­net bank­ing, ex­cept that rather than a bank hav­ing to deal with in­ter­me­di­aries to move that money, your lit­tle bun­dle of Bit­coin in­for­ma­tion en­ters the net­work and is sent out to EVERY node in the web.

These nodes ver­ify the trans­ac­tion and once enough nodes agree that your Bit­coin is le­git­i­mate, the in­for­ma­tion of that trans­ac­tion be­comes the next block in a chain that has tracked every Bit­coin trans­ac­tion ever. That Bit­coin is now owned by your friend and it only took a few min­utes to ar­rive and was prac­ti­cally free.

This chain (or dis­trib­uted ledger) is pub­lic and in­deli­ble, pro­vid­ing trans­parency, and is pro­tected and pow­ered by its de­cen­tral­i­sa­tion.

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