What is Block Chain Technology About?
Like many, you may be thinking, “what is block chain technology about?” Now referred to as blockchain, this technology is the basis for Bitcoin, all other cryptocurrencies and so much more.
The wide variety of uses for blockchain adds tremendous value to society and this is part of the reason why Bitcoin and other crypto currencies are expected to sky rocket…and that’s why blockchain should matter to you – as someone who wants to invest with cryptocurrency.
The purpose of this post is to provide a concise explanation of blockchain with some supplemental information including an example, an infographic, and thoughts from experts in the field. I will also show some applications of blockchain outside of cryptocurrencies.
What is Blockchain?
Blockchain is a way to keep record of transactions that the entire
network has access to at all times. This transaction log is constantly
updated while transactions are being verified. Each time enough
transactions are verified a block is added to the chain. This system is
maintained by people ‘mining’ to verify transactions in aim to get
Bitcoin, for example. Since everyone has access to the information in
the blockchain at all times it becomes impossible to corrupt/hack and
the result is an accurate, self-sufficient, and secure system with
ultimate transparency.
The one line summary:
Blockchain is an accurate record keeping system that offers
impressive security and transparency which can be applied to many
industries.
Centralized VS Decentralized
Typically, systems are centralized; one entity controls the entire
system. This can work well if the entity in control can be fully
trusted. With blockchain, all computers, or nodes, that are part of the
network get a copy of the blockchain which prevents any one entity from
altering the record of transactions.
What is a blockchain transaction? Here is an example
- Someone initiates the purchase of a coffee with Bitcoin
- The transaction request is sent to all computers in the network
- The network validates the transaction (this is the Bitcoin mining process that you hear about)
- The validated transaction joins other transactions to create a new block of data to be added to the chain
- The new block is added to the blockchain and the transaction is complete
Here is an Infographic That Helped Me Better Understand Blockchain…
What Experts Are Saying
“As revolutionary as it sounds, Blockchain truly is a
mechanism to bring everyone to the highest degree of accountability. No
more missed transactions, human or machine errors, or even an exchange
that was not done with the consent of the parties involved. Above
anything else, the most critical area where Blockchain helps is to
guarantee the validity of a transaction by recording it not only on a
main register but a connected distributed system of registers, all of
which are connected through a secure validation mechanism.”
– Ian Khan, TEDx Speaker | Author | Technology Futurist
“The blockchain is an incorruptible digital ledger of
economic transactions that can be programmed to record not just
financial transactions but virtually everything of value.”
– Don & Alex TapscottDon & Alex Tapscott l Author of Blockchain Revolution (2016)
If you use Google sheets then you can understand blockchain technology:
“The traditional way of sharing documents with collaboration is to
send a Microsoft Word document to another recipient, and ask them to
make revisions to it. The problem with that scenario is that you need to
wait until receiving a return copy before you can see or make other
changes because you are locked out of editing it until the other
person is done with it. That’s how databases work today. Two owners
can’t be messing with the same record at once.That’s how banks
maintain money balances and transfers; they briefly lock access (or
decrease the balance) while they make a transfer, then update the other
side, then re-open access (or update again).With Google Docs (or Google
Sheets), both parties have access to the same document at the same time,
and the single version of that document is always visible to both of
them. It is like a shared ledger, but it is a shared document. The
distributed part comes into play when sharing involves a number of
people.
Imagine the number of legal documents that should be used that way.
Instead of passing them to each other, losing track of versions, and not
being in sync with the other version, why can’t *all* business
documents become shared instead of transferred back and forth? So many
types of legal contracts would be ideal for that kind of workflow.You
don’t need a blockchain to share documents, but the shared documents
analogy is a powerful one.”
– William Mougayar, Venture advisor, 4x entrepreneur, marketer, strategist and blockchain specialist
“Blockchain solves the problem of manipulation. When I speak about it in
the West, people say they trust Google, Facebook, or their banks. But
the rest of the world doesn’t trust organizations and corporations that
much — I mean Africa, India, the Eastern Europe, or Russia. It’s not
about the places where people are really rich. Blockchain’s
opportunities are the highest in the countries that haven’t reached that
level yet.”
Vitalik Buterin, Inventor of Ethereum
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Applications of Blockchain
What Have We Learned?
Blockchain is an accurate record keeping system that offers
impressive security and transparency.
Blockchain is secure due to the high level of transparency and its decentralized nature.
Blockchain can be used for many applications within several industries.
I hope that you have enjoyed this post and maybe learned something
about blockchain. Please leave comments below if you have any questions
or feel free to email me directly.
Always here to help,
Justin
justin@investwithcryptocurrency.com
investwithcryptocurrency.com
Invest With Cryptocurrency; Grow Money
Your post is very complex and I have to be honest way over my head. But to those that understand you have given them a lot of information to digest. You need to be on your toes with these things. Your post is laid out well and the images tell everything need to know. Carry on giving this information to the those that understand it is going to help them greatly.
Thanks for the comment Pam! I can see how it can be an overwhelming amount of information. I suppose that you don’t really need to know how blockchain works in the same way that you don’t need to know how a computer works to buy stuff online. The benefits that come with this technology will have cryptocurrency integrated into our daily lives in no time.