Summary

In this first chapter of the second part of the book, I have covered three fundamental concepts of a blockchain—assets, transactions, and hashes. I explained that one of the main purposes of the blockchain is transferring valuable assets using a shared ledger and compared it with the current solution of keeping separate digital records in an Excel of central database.

In the section about transactions, I covered how these assets are transferred from one to another entity using a managed peer-to-peer network. I explained that assets are recorded in a transaction on the blockchain in a digital shared ledger that holds the full history of the assets transferred, and which is distributed to each entity that is part of the blockchain, so that each entity has the same truth.

I went through some examples of transferring assets, including cryptocurrencies such as Bitcoin and Litecoin, but also more interesting assets such as real-world goods, and financial products. I covered how the structure of a transaction appears and how transactions can be sent to and from entities using own digital identities (for example, wallets).

To demonstrate how transactions are secured, I talked about hashes, hash functions and what their importance is when identifying addresses, transactions, and eventually blocks. I covered the hash functions that the core blockchain code uses to create identifying output strings and explained the inner workings of these different hash functions.

In the next chapter, we will look into the building blocks of the blockchain itself. What are blocks and chains and how to do we know that chains are valid and not broken?