Blockchain, cryptocurrencies, Bitcoin, they’re all big buzzwords, that’s for sure. But when it comes to the Blockchain technology in itself, the hype isn’t at all unwarranted.
Regarded as the next most revolutionary technology since the internet boom, it is thought that Blockchain is about to transform every part of our lives. Sounds pretty amazing and we can see why it’s likely to happen. But first, let’s get to the bottom of what it is all about!
What is the Blockchain technology?
Here’s a simple way of putting it, blockchain for dummies style. Back in the day, our societies were smaller, meaning trade between individuals was pretty easy, mainly because it was all done one to one – think peaches in exchange for oranges. As the distance in our trade grew, we ended up inventing institutions to help us manage it all – for example Amazon, Airbnb and all others. When you think about it, they’re really just digital marketplaces facilitating an exchange of value – so, trade.
This is where Blockchain comes in – the technology allows us to still trade one to one, but at scale. Instead of a middle company or platform to help you make that transaction, there’s software code instead. This code is being run by lots of personal computers, each with a node. And people use those computers to hold bundles of information or transactions submitted by others (blocks) in a chronological chain.
Why is Blockchain different?
The Blockchain uses a form of maths called cryptography to ensure these records can’t be compromised by anyone. And to strengthen it further, the computers in the network all have the same software and history of transactions, validating them as they happen, by everyone using the technology – meaning the database is constantly updating itself.
In contrast with pretty much everything else we’re familiar with, the network is not only decentralized, with all information stored across various computers, but it’s also distributed. There’s no central ‘owner’ as such, meaning everyone can use it and help run it – everyone ‘owns’ it.
Pretty neat, right?
Blockchain vs. Bitcoin and other cryptocurrencies
Now, Bitcoin is a type of Blockchain. It differs from other currencies because there’s no middleman involved, i.e. a bank. Instead, people everywhere help move the digital money by validating others’ Bitcoin transactions, with their computers earning a small fee in the process. It’s also very secure – Bitcoin uses the Blockchain to track records of ownership over the digital cash, with only one person being able to own it at any one time – making it impossible for the cash to be spent twice, like counterfeit money can.
Lots of people tend to think of the Blockchain as equal to Bitcoin, because it’s now a well-known cryptocurrency that’s always in the news and seems very exciting. Clearly, that’s not the full story. Bitcoin, like Ethereum and other crpytocurrencies, is a public Blockchain. At the moment, various companies are in the process of getting together to build private Blockchains, which are initially closed for research.
The whole thing is all research at this point in general, to figure out best use cases for the Blockchain and what it means for trade!
What the future holds
We said the hype isn’t unwarranted. There are a lot of industries the Blockchain is likely to revolutionize. For example, it could bank the unbanked, including those in third-world countries who don’t have access to traditional banking. It could allow anyone to safely send money across borders. Within healthcare, it could store and securely track patient records. In politics, it could wipe out issues with election integrity.
Because it’s a system that you can add data to and not be able to change previous data within it, the Blockchain technology has the ability to make organizations that use it, transparent, democratic, decentralized, efficient and secure.
Why should you care?
The Blockchain technology and cryptocurrencies in general have the ability to promote trust, freedom, justice and wealth, without relying on a middleman or any kind of authority. The Blockchain has the potential to *be* an economic system (duh!), legal system, new way of organizing society and generally a way of holding public records not owned by anyone in particular. Just like the internet boom, it’s here to make the world as we know it, significantly different.
Plus, continuous learning keeps your brain alive!