Blockchain Basics

Terminology

Dapp = Decentralised Application

Web 1 = Permissionless open source web static content. No interactive apps Web 2 = Permissioned web with dynamic content - your agreements kept on centralised servers Web 3 = Permissionless web, dynamic content, decentralised networks run your agreements and code

What is a Blockchain

SHA 256 Hash - a hash is a fingerprint of some digital data. So when I type 'wallis' using SHA256 I get the following "hash" or fingerprint of "Wallis" which is

75df8a454abb44a5a13652bb1157dd40c5eacb0d836234d622f210b7d45364e6

However if I type wallis (lowercase 'w' ) I would now get a competely different hash of fingerprint

fefccc2f3085a5cce005038570c9c1f97a3fa712a4b6640ad51b2c9e3ba43112

The best explanation of what is a blockchain are these videos on YouTube:

What is a Smart Contract (“if/when x event happens, then execute y action.”)

Smart contracts are a set of instructions executed in a decentralised way without the need for a centralised or 3rd party intermediary.

A general notion of smart contracts could be seen in systems like vending machines, for example a specific code leads to an expected snack or item, blockchain formed the foundation of smart contracts due to the blockchain being digital, immutable and transparent.

We could look at Bitcoin as being the first protocol smart contract - establishing a set of conditions that had to be met so as to transfer bitcoins between users. These conditions include the user SIGNING the transaction with their PRIVATE KEY that correlates to their PUBLIC KEY, and the user having enough funds to cover the transaction.

This evolved to offering a multi-signature transaction whereby a defined number of people (or public keys) sign a transaction with their private keys before its considered valid. This increases the security of user funds by mitigating single point of failures like a stolen or lost private key.

Blockchains by themselves and smart contracts have an issue in that they do not have access to the "real world" and as we want to replace the "agreements" we have in our everyday lives with "digital agreements" which don't have access to the real world data bring up the "Oracle Problem"

"Oracles" are any device that delivers data to these decentralised blockchains and as such these Oracles also need to be decentralised themselves ( Chainlink = is a decentralised oracle network and blockchain agnostic) similar to the decentralised blockchain network.

The 'on-chain logic' will be decentralised but you also need the 'off-chain data' and computation to be decentralised Combining this decentralised on-chain logic with this decentralised off-chain data and computation gives rise to Hybrid Smart Contracts.

What is the Value of Smart Contracts

What problem does this technology solve? A technology is only as good as the problem it solves. Smart contracts, blockchain, cryptocurrencies, Web3.0 those are all different words that encapsulates the idea of what we are doing in such a unique paradigm that the easiest way to sum up what these smart contracts do is that they create TRUST MINIMISED AGREEMENTS or "unbreakable promises" or the "pinky swear" with speed efficiency and transparency. Everything we do in life is the result of an agreement or contract in some form or another and basically is a "promise" you pay me and i promise to give you something in return (insurance, utiitiies, banks, motor vehicle service etc etc) without screwing you over. This is not always the case !!!!