What is Blockchain technology?
What is blockchain technology?
A blockchain is a decentralized, distributed, and public digital ledger that is utilized to record transactions across several computers so that any involved record cannot be altered retroactively, without the alteration of all subsequent blocks. This allows the participants to verify and audit transactions independently and relatively inexpensively. A blockchain database is managed autonomously using a peer-to-peer network and a distributed timestamping server. They are authenticated by mass collaboration powered by collective self-interests.
History of Blockchain
The blockchain was invented by Satoshi Nakamoto in 2009 to serve as the public transaction ledger of the cryptocurrency bitcoin. The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need for a trusted authority or central server. The bitcoin design has inspired other applications, and blockchains that are readable by the public are widely used by cryptocurrencies. Private blockchains have been proposed for business use.
How does blockchain work?
Blockchain is a technology that allows data to be stored and exchanged on a peer-to-peer (P2P) basis. It has been described as a value-exchange protocol. This signifies each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary.
Blockchain networks have no central authority – instead, they are supported by multiple users (known as ‘miners’) who work to validate new transactions. The validation process ensures that the same transaction does not take place multiple times – known as a ‘double spend’.
The transaction is then added to the existing blockchain. Once validated, each new block is added to the previous block, creating a chain that can be used to store data chronologically. This method of storing data makes it difficult to change or remove data retrospectively, which means that it is well suited for recording events or transactions in which it is important to maintain incorruptible records.
Bitcoin and Ethereum are the two of the most widely discussed cryptocurrencies, but the list of the most valuable cryptocurrencies extends far beyond them. Some have attributed this growth to the 2017 crypto bubble, which saw many coins increase dramatically in value before collapsing in 2018.
A bitcoin transaction is nothing more than a transfer of ownership from one user’s wallet to another user’s wallet on the blockchain network. The best way to think about bitcoin is as digital money or digital cash. It enables you to send value just like an email enables you to send messages. Blockchain has the potential to revolutionize multiple aspects of our lives, from the way we vote for our political leaders to the way we buy and sell homes. Here are some of the biggest blockchain projects that are being developed right now.
Blockchain Use Cases
When you buy a house, there are a lot of people involved in the process: real estate agents, mortgage lenders, title insurance companies, appraisers, and more. All of them have one goal – to make sure that everyone gets paid. But all of those middlemen come with a price tag: On average, 6% of the $200,000 sale price of a home goes toward commissions and fees.
Blockchain could eliminate the need for many or even most of those middlemen by creating a trusted ledger on which all transactions can be recorded. And in May 2018, two real estate companies made history by completing what is believed to be the world’s first residential real estate purchase using blockchain technology.
Here are some popular blockchain projects:
- Ripple is an enterprise blockchain solution for global payments. It’s designed to connect banks, payment providers, and digital asset exchanges to provide frictionless payments around the world.
- Quorum Blockchain, an implementation of Ethereum also developed by JPMorgan Chase with a focus on privacy, uses a voting consensus mechanism to improve upon transaction speed in private networks
- Dash, is an open-source cryptocurrency that has released its platform known as Evolution with several features to make the project more accessible to the general public. Dash has been designed for rapid transactions while allowing a swift governance structure that overcomes the shortfalls faced by Bitcoin. Dash is becoming a favorite of users as it can be split into rewards into three categories: miners, masternodes, and decentralized government budget.
- Coinbase Global Inc, formerly Coinbase Inc., operates exchanges between crypto-assets and fiat currencies in 33 countries, and bitcoin transactions and storage in 190 countries worldwide.
Why is blockchain a digital asset?
Blockchain is a decentralized technology spread across many computers that manage and record transactions. Blocks are files where data concerning a digital currency network is stored permanently. A blockchain is a series of blocks that records data in hash functions with timestamps so that the data cannot be changed or tampered with. Every node or computer connected to the blockchain has a copy of the blockchain. Each time a block gets completed, a new block is generated. There are countless such blocks in the blockchain, connected (like links in a chain) in proper linear, chronological order. Every node has its copy of the blockchain. And because thousands of nodes store this blockchain, it cannot be controlled by any single entity and has no single point of failure (SPOF).
Blockchains are going to revolutionize a lot of industries. Whether or not you think cryptocurrency is going to replace fiat currency (it won’t), blockchains will be able to do so much more than record financial transactions. It can save records of medical data, speed up transactions in supply chains, and even help the government keep better tabs on its spending. Even more exciting, since blockchain tech can work with almost any kind of transaction or agreement, it has the potential to make large portions of criminal law obsolete. Hopefully, this post has given you a sense of how blockchains could change the world as we know it. If you want to learn more about blockchains, stay tuned!