A few years ago, the definition of the internet was different. People used the internet to connect to the rest of the world, find information that was hard to find in a library or any such resource. With the industry consistently changing, a major breakthrough came in 2008-09 when an anonymous person named Satoshi Nakamoto changed the financial industry forever. This anonymous developer sent the whitepaper containing the idea of a cashless financial system that will be completely anonymous. This, the very first application of blockchain technology was Bitcoin.
In this post, I will try to bring your attention to the backbone of all the cryptocurrencies- The Blockchain. Everything you need to know about it, and most importantly the future of blockchain technology. Let’s begin easy.
What is Blockchain Technology?
I assume you are aware of what is a cryptocurrency. For those who don’t let me brief it for you. Cryptocurrency is like the paper cash or fiat money that we use in our daily lives. We use it for shopping, buying movie tickets, good, and services etc. Similarly, cryptocurrencies are used for the same thing(s). You buy cryptocurrency using fiat money(at least for now) and spend anywhere you like. The reason why cryptocurrencies are worth using over fiat money is that the transactions of cryptocurrencies are not traceable and hence it leaves no room for anyone to attack your funds. Everything about the transaction is encrypted using cryptography and hence your transactions are super safe.
That was a brief on cryptocurrency. I will prepare a special guide covering everything you should know about cryptocurrency in a couple of days.
Coming back to the main topic.
So blockchain is the backbone of a cryptocurrency, it’s the soul, the vertebrae of it. As per coinmarketcap, there are over 1500 cryptocurrencies and 9000+ markets. Pick any cryptocurrency from this list, at the core you will find blockchain technology. To brief, the blockchain technology is a simple and safe mode to distribute public ledger of account. It keeps track of every single transaction that happens on the network it is implemented in. Furthermore, all these transactions are verified by miners who continuously put time and effort to verify these transactions. In return, they get a certain amount of cryptocurrencies as a reward.
How does a blockchain work?
To explain the functioning of Blockchain, first understand how miners work and earn a reward. Miners have dedicated computers powerful enough to solve mathematical puzzles. Every time they solve these puzzles, they get some reward. Furthermore, each time the miners successfully mine a single unit, they add a “Block” of a verified transaction the public ledger making a chain of “Blocks”, hence the name Blockchain.
The cycle of verifying transactions and publishing blocks into the public blockchain continues endlessly. Unless and until you manually stop, the computer will continue to solve and publish the verified transactions.
If you see any public blockchain like on MinerGate, you will see a list of verified transactions.
Each of these “blocks” contains a certain number of verified transactions(which can be anything between 1 to n). Let me help you understand what each column mean in this table.
Height: Block index in the chain, counting from zero(i.e Genesis Blockchain, the first ever Bitcoin block mined)
Timestamp(UTC): Block timestamp displayed as UTC. The timestamp depends on the miner who mined the block.
Transactions: Number of transactions in the block, including coinbase transaction(which transfers block reward to the miner)
Size: Size of the whole block, i.e. block header plus all the transactions.
Hash: Unique key for each transaction in any given block.
How Is Blockchain different from regular banking ledgers?
The orthodox financial system, i.e. the banks and accounting systems use ledgers to track transactions with the timestamp for each of them. The major difference between the traditional financial system and blockchain technology implementing cryptocurrencies is that the blockchain completely decentralizes the whole system and is open source. These two features have led to change the whole financial system and is ready to uproot the existing system soon.
What this means is, people, do not have to rely on a central bank or financial body to keep track of their transactions, which charged them a bomb of money. the peer-to-peer blockchain technology is capable of tracking all the transactions without fear of having them erased, stolen or lost.
Furthermore, since the blockchain technology is open source, it is more versatile and programmable than the current financial bodies and banking ledgers. If you as a developer want a feature that’s not existing anywhere, you can simply build it on the existing software through consensus. Having something like this is difficult for central banks and traditional bodies as all of their rules and regulations are a point of failure at this.
Enough of the present, and past. Time to look into the future of this breakthrough in financial systems.
Blockchain beyond Bitcoin – The future of Blockchain
A future where e-com, online betting, dating and what not is booming like anything. The safety and security is something everyone will consider before making any move. Furthermore, the features of the blockchain technology is so futuristic, that its implementation(s) will not only help the financial system, it will help almost every field where internet exists, or can be implemented. Examination, voting, data storage, social media are a few areas of implementation to name a few.
Having said that, let me tell you the potential impact of blockchain technology today and in a single infographic.
As far as the present is concerned, the blockchain technology is severely underrated technology. Just one application of it (cryptocurrencies) has uprooted the industry already(as per stats, cryptocurrency is over $9 bn market already)
In other words, cryptocurrencies have become a mode of investment. Furthermore, the world isn’t seeing cryptocurrencies as the mode of primary payment, yet. People, including me, have mixed reviews about cryptocurrencies. One side it is 100% anonymous, on the other side, it is dangerous to imagine the black market, illegal bodies, and terrorism using this mode to fund themselves.
However, it is in the distant future, as of now, the world is enjoying the investment they’ve made so far. Or, making investments and trading right now.
Over to you. Do you know, someone who’s looking for this information? Share this with them and share this in your network too.