If you have ever asked yourself what’s blockchain and how does this technology work, we can assist.
Cryptocurrencies make use of distributed ledger systems known as blockchain protocols to securely transfer holdings. The essential power of Blockchain is its ability to distribute information in a staggeringly efficient, secure yet transparent way. Cryptocurrencies are made possible thanks to the advent of blockchain technology.
So… What’s Blockchain ?
You can think of the blockchain as a network or web of nodes, where each node represents what’s called a miner. This can be one individual with one computer or a huge farm of computers operated by a large conglomerate. Everyone, around the world can partake in the mining process.
When you connect your computer to the blockchain and begin mining, not only is your computer now helping verify batched transactions that take place on the network for various users, but it is also helping in further securing and strengthening the network as a whole.
Electricity and computer hardware does not come cheap, so why should someone use their computer 24/7 to verify transactions for others? In exchange for supporting the network, miners are rewarded with a block reward fee that compensates them for their time, energy, and effort spent running mining software. Cryptocurrencies are thus a byproduct of a fundamental socio-economic process known as incentive, where-in each cryptocurrency has its own individual blockchain consensus method that is used to secure and uphold the network.
Blockchain Visual Aid
How does Blockchain technology affect my life?
Much like the internet you’re already well acquainted with, you don’t need to know the underlying infrastructure and science that makes the blockchain work to understand the utility it has in our everyday lives. For the time being, finance is the industry that offers the most use cases for this technology, however the best applications are the ones the thought-leaders in the community have yet to think-of, test and ultimately implement. Venture capitalist and blockchain specialist William Mougayar explains it best when he gives the following analogy:
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.
William Mougayar
With this analogy, we can begin to see how other use-cases can be applied to a plethora of different industries – property registration, purchase and sale of property, supply-chain management, legal contracts, and much more.
DApps – Decentralized application
One of the biggest breakthroughs the cryptocurrency world has witnessed since the creation of Bitcoin is Ethereum. With the Ethereum blockchain, developers can easily build DApps (decentralized applications for desktop and mobile that work on top of or integrate with the blockchain) using JavaScript based Solidity as the main language to create various smart contract based utilities and tools.
This is inevitably driving a huge start-up and ICO (Initial coin offering) race across the globe, with 4 major continents participating in addition to international corporations and institutions thereof.
As the power of blockchain becomes more apparent, countless industries; from healthcare to financial services as well as companies like Microsoft, IBM and Deloitte have begun integrating and testing various blockchain projects and solutions.
