{"id":15571,"date":"2025-12-03T06:23:06","date_gmt":"2025-12-03T06:23:06","guid":{"rendered":"https:\/\/www.btse.com\/blog\/?p=15571"},"modified":"2025-12-03T06:27:59","modified_gmt":"2025-12-03T06:27:59","slug":"a-beginners-guide-to-blockchains","status":"publish","type":"post","link":"https:\/\/www.btse.com\/blog\/a-beginners-guide-to-blockchains\/","title":{"rendered":"A Beginner\u2019s Guide to Blockchains: From Bitcoin Mining to Stablecoins"},"content":{"rendered":"

You definitely tend to hear a lot of new terms when you first start trading crypto.\u00a0<\/span><\/p>\n

Mining, layer 2s, proof of stake, gas fees<\/span> – <\/span><\/i>what does it all mean??<\/i><\/b><\/span><\/p>\n

We know how hard it is to learn all these terms, so we\u2019ve curated a simple guide to help you understand.\u00a0<\/span><\/p>\n

 <\/p>\n

Question #1: What is a blockchain? Is it like infrastructure for cryptocurrencies?<\/b><\/span><\/p>\n

Answer: A <\/span><\/span>blockchain<\/b><\/a><\/span> is a decentralized digital database that securely stores records across a computer network’s nodes, allowing different types of data to be stored. However, all the data <\/span>is immutable and irreversible.<\/span><\/span><\/p>\n

Information in blockchain is grouped into blocks, and each block is connected to the previous one using cryptography. Everyone on the network keeps a copy of the chain, so no single person controls it, and new data is added through consensus mechanisms (e.g., Proof-of-Work, Proof-of-Stake)<\/span>
\n<\/span><\/p>\n

Imagine blockchain as the underlying infrastructure and fundamental layer that empowers cryptocurrencies and other decentralised applications.\u00a0<\/span><\/p>\n

Cryptocurrencies run on top of the blockchain and use it to record transactions, prove ownership, transfer value, and keep everything secure and verifiable without a central authority.\u00a0<\/span><\/p>\n

 <\/p>\n

Question #2: What is proof of stake vs proof of work? What is bitcoin mining?\u00a0<\/b><\/span><\/p>\n

Answer:<\/span><\/span> Proof of Stake (PoS)<\/span><\/a><\/span> is the consensus mechanism that reduces the need to use computational power by randomly selecting validators to confirm transactions and create new blocks in the blockchain. It is used by Ethereum, Solana, Cardano, Avalanche, etc.<\/span><\/span><\/p>\n

 <\/p>\n

\"\"<\/p>\n

 <\/p>\n

Proof of Work (PoW)<\/span><\/a><\/span> is a consensus mechanism that requires computational effort to validate transactions. The first one to solve complex mathematical puzzles gets to add a new block and earns rewards. It is used by Bitcoin – when people talk about <\/span><\/span>Bitcoin mining<\/span><\/a><\/span>, they are referring to this process.\u00a0<\/span><\/span><\/p>\n

 <\/p>\n

Question #3: What is a gas fee? How to use it?\u00a0<\/b><\/span><\/p>\n

Answer: <\/span><\/span>Gas fees<\/span><\/a><\/span> are essential for executing transactions and smart contracts, like paying a transaction fee for passing. Gas fees are most commonly seen in Ethereum transactions; when you move Ethereum or ERC-20 tokens from one Ethereum wallet to another, you have to pay a gas fee.<\/span><\/span><\/p>\n

The fee compensates the network for using its computer power, as the cost paid to validators for processing your transaction.\u00a0<\/span><\/p>\n

The methodology of how the gas fee works is that each transaction has a gas amount that depends on how much work it needs.\u00a0<\/span><\/p>\n

The amount of gas fees paid depends on how busy the network is. If the network is busy, the gas fee rises. On the other hand, if the network is quiet, the gas fee drops. This is why sometimes gas fees for Ethereum can spike during periods of market volatility.<\/span><\/p>\n

 <\/p>\n

Question #4: What\u2019s the difference between layers in blockchain<\/b><\/span><\/p>\n

Answer: The blockchain ecosystem uses <\/span><\/span>layered approaches<\/span><\/a><\/span> to boost efficiency.\u00a0<\/span><\/span><\/p>\n