While you take the time to practice social distancing, why not also learn something new? We decided to put together a quick blockchain 101 crash course to help you get a head start on your #StayHome learning program.
So… What is Blockchain?
Blockchain is the clever tech powering the PumaPay PullPayment Protocol!
It’s an open ledger containing all the information about transactions, including everything from the sender and receiver to the amount sent and the timespans. All of these transactions are grouped together and held in blocks, and once each block is full a new block of transactions is started. The different blocks are linked to the next in a chain-like fashion – hence the term blockchain!
The important thing to remember is that once a transaction has been added to the blockchain it can’t be edited or deleted – making it completely secure.
The Blockchain Network
The blockchain is held over a peer-to-peer network, all this means is that instead of being held in one central location, the network is held over a network of computers, each one called a node. Each of these nodes has the power to write transactions into the blockchain and is rewarded when they close blocks.
This whole system is a type of decentralization, which means that payments over the blockchain can happen directly, without the middleman, so you no longer have to suffer the costly transaction fees.
The method of successfully closing a block is called ‘hashing’, and this is the job of the miners who control each node. The hash is a key of numbers and letters which specifically relates to a certain transaction. To create the hash, we need to convert the plain text using a hash function, and it is the job of the miners (the owners of certain nodes) to figure out how to create the hash in the appropriate format (e.g. with several leading zeros 0000000000ahfgwjnweo…).
The miners therefore need to solve an algorithmic puzzle (called a nonce) which will produce the hash in the correct format. If a majority of 51% of the blockchain network agrees with the answer, the block can be added, and the winning miner awarded for their efforts. The linking of the blocks is because of this hashing, with each block containing the hash of the previous block.
Top Tips on Transactions
- As each transaction generates a hash (a key of numbers and letters), any change in the transaction will create a completely new hash and won’t fit into the blockchain anymore!
- Transactions are placed in blocks in the order they occur.
- The hash depends on both the transaction itself and the previous transaction’s hash.
- It’s the node’s job to check that no transactions have been changed.
But How Does This Power PumaPay?
We run the PumaPay PullPayment Protocol over the Ethereum blockchain. All this means is that to complete transactions, we need to pay for Gas Fees – a small fee payable in Ether (ETH) to the Ethereum blockchain, which usually only ranges from a few cents to $1.
Remember the miners? They are rewarded with this ETH whenever they successfully close a block! Which means that transactions with higher gas fees are more likely to be picked to be mined first. So, the more fees you pay, the faster your transaction will be authorized – although PumaPay makes sure you’re aware of your Gas Fee costs for each transaction.
PumaPay also utilizes smart contracts in its technology! A smart contract is just like any other contract except it’s managed digitally and provides a way for transactions to be made when certain conditions are met.
The smart contract basically consists of code which contains a set of rules that both parties agree to. If the terms are met, the agreement is automatically enforced by the blockchain – simple as that!
How Do I Get Started?
Getting yourself set up with PumaPay is easy!
- Download the PumaPay Mobile Wallet app from the App Store or Google Play.
- Create your account within a few minutes – check out our how-to guide here. Download the PumaPay Mobile Wallet app from the App Store or Google Play.
- Manage your cryptocurrencies all in one place!