What is blockchain?
There's a new technology that has the power to revolutionize how you, businesses, and the world interact. You've probably heard of it: blockchain.
Hearing the word ‘blockchain’ these days is comparable to hearing the word ‘internet’ in the early 90s. It seemed elusive, like something that wasn't going to impact your daily life. But here we are, more than 20 years later, and it has become ubiquitous. Think about how the internet has transformed businesses, commerce, communication, even music and video. We carry the internet in our pocket. We can transfer money at the touch of a button, check the weather, get directions, and even have food delivered to our door.
The next technology to have that kind of impact isn’t necessarily going to be big data, or artificial intelligence, or even social media. It will be blockchain.
Blockchain’s most impressive feature lies in its power to eliminate a double-spend problem. So now, in this exciting time in history, every kind of asset, from tickets to money, to music, can be stored, moved, exchanged, and transacted without an intermediary. People everywhere can transact peer-to-peer and trust each other by using collaboration and cryptography.
How did we get here, to this place of trust and collaboration?
It began when Satoshi Nakamoto, whose accurate identity is still unknown, released a white paper in 2008, introducing a purely peer-to-peer version of electronic cash known as Bitcoin. It is here that blockchain technology made its debut. Even today people believe Bitcoin and blockchain are one and the same. They are not.
Bitcoin, another alternative currency, utilises blockchain technology. While an important one, Bitcoin is only one use of blockchain technology. Blockchain allows people to exchange assets and perform transactions without a third party. Imagine a world where you don't need intermediaries. While traditionally we needed central authorities to trust one another and fulfil contracts, blockchain makes it possible to have our peers guarantee that for us. When a transaction is conducted, it's posted across tens of thousands of computers around the globe.
These transactions are recorded as blocks. Let's imagine a sheet of paper that has 25 lines. When a sheet is filled up with 25 transactions, the block is validated via group consensus. Once the page has been validated, it is added to a stack of previously validated sheets. Each sheet on the stack can be assumed to be trustworthy because, once a sheet is validated, it can't be changed. Because at this point, all the sheets are linked together. And to link our sheets together, we embed information from the previous sheet of paper into the new, recently validated sheet. In a blockchain, our sheet of paper is equal to a block. The act of embedding a previous block of information into the current block of information is called chaining, hence, the name blockchain. In order to compromise or hack a blockchain network, someone would have to gain control of the majority of the computers in that network. This is extremely difficult to do. There is no longer a single point of failure, and this is what makes blockchain infinitely more secure than what we have today.
Blockchain isn't just for assets, though. It extends to contracts. These are called Smart Contracts. A smart contract self-executes and handles enforcement, the management, and performance of agreements between people. Examples of smart contracts include insurance policies, copyrighted content, escrow and lending, wills, and trusts.
There are so many possibilities with blockchain; not just in the now, but with things we haven't begun to think about yet.
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