Blockchain Basics

The Basic Idea Behind Blockchain

First, computers that want to share data join together on a network by running the same blockchain software. As data comes into the network—for example, as people spend and send money—the data is grouped together into “blocks” for verification. Then, on a regular schedule, usually every few minutes or even every few seconds, the connected computers vote on the current block of data, saying, in effect, “yes all this looks good to me” (or not). If the current block is rejected, then the network will vote on it again when the next block is submitted. If the current block is accepted, meaning the network agrees the data it holds is valid, it’s appended to the system’s entire past history of validated data blocks. So the data is “chained” together. Eventually, a long, connected chain of blocks forms.

As you can expect there’s quite a bit of technical detail that goes into all this. The initial paper describing the first blockchain system is ingenious, and we highly recommend reading it.

Bitcoin

Created a decade ago by the still-anonymous “Satoshi Nakamoto”, Bitcoin is the source and inspiration for basically all blockchain systems. Many popular platforms like Litecoin and Dogecoin are straightforward derivatives of BTC. Stellar doesn't use the same technology, but many of its basic principles are the same.

• This is a good basic technical/conceptual Bitcoin primer.
• This is another good overview, which ties in some of what motivated the creation of the technology.
• This Op-Ed (by Meridian speaker Carlos Hernandez) lays out one of the best positive effects of decentralized currency. Bitcoin is largely a curiosity for Americans, and might never evolve past that, but it has a real use case as an economic safe haven in many parts of the world. Stellar is hoping to build something as powerful but more user-friendly and more compatible with the existing monetary system.

Stellar

Stellar was created in 2014, after Bitcoin but before Ethereum. Stellar uses a much more environmentally-friendly syncing mechanism than either platform and was designed specifically for remittances and payments, so it has “cashlike” delays between transactions (i.e. very short) and it’s more or less free to use (transactions cost way less than a penny). Like Ethereum, Stellar allows you to issue other assets (say, a digital representation of a dollar or a peso) and to trade them very easily within the network.

Unlike almost all other blockchain systems, Stellar can connect to real-world endpoints, so people can turn their digital representations of money into something they can actually spend. Growing that network of real-world partners is a big focus for the Stellar Development Foundation.

• These videos, made by Coinbase, a popular U.S.-based exchange, provide more context and information about Stellar.
• Lumenauts.com is a Stellar community site with a lot of great Stellar explainers. They’re bundled into a course that is a very thorough overview of the platform.

Trade & Purchase 1PAY 

Buy 1PAY on Lobster

LOBSTR is a great way to get started with Stellar. Simple, smooth and secure, it has all what it takes to manage your Lumens wisely.