If you are out on the internet recently, you must have heard of terms like "Blockchain" or "Cryptocurriencies". They have become quite the rage in the last few years. People are saying that it will change the world. But most of us don't really know or understand this blockchain or cryptocurrencies and why we should know about them. Let's try to understand it a little.
This article summarizes the most basic and important concepts needed to understand blockchain and its applications. So that you can participate in any conversation about this matter without getting lost in the first sentence.
Before we learn what is Blockchain, first we need to know what blockchain is not.
- Blockchain is NOT BITCOIN
- Blockchain is NOT a cryptocurrency
Now that we know what it is not, let's look into what it actually is.
Blockchain is the name of a whole new technology. As the name suggests it is a chain of blocks. Now, what are those blocks? These blocks are the transactions or the data stored on the blockchain. Each block is linked to two other blocks making a sequence of those blocks.
According to IBM, a pioneer in Blockchain and Tech Industry "Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network."
All the data in those blocks are visible to everyone in that blockchain. It is also immutable, meaning that once the data is entered into the blockchain it cannot be altered.
Now there are a lot more things that we need to know to understand how blockchain works, but we will not be looking into them in this article. I will be writing more articles on the blockchain which will dive into more detail.
Whenever we do any type of transaction on the internet or use any service we need to be able to trust the other party that they will hold their word. To achieve that we have traditionally used middlemen, like banks, which facilitate those transactions. For years this method has worked really well but it has a lot of problems too. For example,
- They can be really slow
- They demand a fee to use their services
- We give them a lot of power and control over our lives
- They have full control over our data and can choose to do anything with it.
By using blockchain technology, we can eliminate a lot of those problems since it is not managed by any central authority but a group of people (everyone who uses it).
I will be writing a lot more articles about blockchain which will discuss the technologies in a lot more detail.