Ethereum and other cryptos have a blockchain at their core. This blockchain is a effectively a database that is distributed or duplicated across many computers that choose to be on the network of a particular cryptocurrency, these computers are referred to as nodes on the network. There are really three inter-related technologies in the blockchain which were first outlined in the original Bitcoin paper that started the whole cryptocurrency craze. Here they are in no particular order:
- Peer-to-peer networking – a group of computers that communicates amongst themselves to share stuff (much like torrents) without relying on any single computer which means there isn’t a single point of attack or failure.
- Asymmetric cryptography – a way for these computers to communicate securely, using complicated and hard to crack crypto algorithms, the data neds to be encrypted and decrypted. The asymmetric part, for the purpose of simplicity just means that only you can transfer your tokens, and this is ensured through the use of two different keys a public one and a private one (more on this in a later post).
- Cryptographic hashing – small, unique fingerprints that identify a piece of data so even when a small change is made, the fingerprint will change.
Together, these three elements are analogous to a decentralized database and are called that because they are stored on every node in the network.