Blockchain: Technology Smart Guide for Beginners (Everything You Need to Know about Blockchain)
Maybe you’ve heard the word come by at some point, you were watching the news, or heard in the context of Bitcoin for example. However, you became interested, you were smart to come here, as we’ve got the answers to all your questions regarding blockchain. We’re aware that it can sound very complicated, blockchain technology, but we’ll make sure to take it from the bottom and explain everything in careful detail.
What is blockchain?
Simply put, blockchain is an online method of keeping data or records stored. It’s like a huge database that is saved onto a network. This network consists of nodes, which are no more than computers connected to the network. In many networks, all the nodes are connected to one central processor, but that’s not how blockchain works. The database is distributed and has no central point, this is one of the big strengths of blockchain. This lack of a central party removes the need for a third party if you want to make transactions, thus transfer value or data. These records, or pieces of information, are stored in what we call blocks. Each block on the blockchain contains encrypted information along with a timestamp and a link to the previous block. Cryptography ensures that data is safe, and that no one can access your information. So, your data is safe in the blockchain, yet the system is also fully transparent. Anyone can access the entire history of information that makes up the blockchain.
How do these transactions work?
I call them transactions in this case, because most blockchains work with exchanges of value, like cryptocurrencies do, but blockchain technology could also work with the exchange of information.
Let’s say you want to make a transaction from yourself to a second person. You make the transaction, which is then encrypted into what we call a block. Every node in the network receives this block (but no one can alter the content of this transaction since it is encrypted) but it’s not yet verified at this point. Complex mathematical problems need to be solved, and the first one to complete the next problem has the right to add a new block to the network. These mathematical problems take a lot of CPU to solve, and the people who solve these problems receive a small award, in the world of cryptocurrency this is called mining.
The use of Blockchain technology
You might be wondering what the use of blockchain technology is anyway, and we’ve got an array of answers for you. Blockchain has potential to become the new way of transferring both value and information. This can manifest itself in cryptocurrencies, which is what we are currently seeing a lot. Blockchain technology could also be used to set up a digital identification system or create a distributed cloud database for people to store their information. The properties of blockchain, which are its transparency, decentralization and cryptography allow it to be useful for plenty of systems. So, prepare yourself for the rise of blockchain systems in the upcoming future
Now you know what blockchain really is, and how the transactions of value or information work via the blockchain technology. Hopeful you figured out that it is indeed an incredibly handy mechanism that could eventually replace a lot of the current systems we’re using while also solving a lot of the problems that we’re currently having with many of these systems. Just to take one example, the current economic system, in relation to the economic crash of 2008, but that’s an entirely different story.