What is Blockchain?
At its most basic, a blockchain is a list of transactions that anyone can view and verify. It’s what we call a public ledger, or a decentralized record of transactions.
For example, the Ethereum blockchain contains a record of every time someone sent or received Ether (or ETH). Blockchain technology makes it possible to transfer value online without the need for a middleman like a bank.
The list of transactions contained in the blockchain is fundamental for most cryptocurrencies because it enables secure payments to be made between people who don’t know each other without a trusted third party to verify.
Because the technology utilizes cryptography, payments via blockchain can be more secure than standard debit and/or credit card transactions. For example, when transacting with Bitcoin, there isn’t a need for the user to provide sensitive information. In other words, there is almost zero risk of your financial information being compromised.
What’s the main advantage of Blockchain?
If we consider how much of our financial life takes place online, and how every one of these transactions requires a third party, such as a bank or a payment processor, we will quickly realize how clunky the current system is.
Blockchains allow for the same transactions to happen without any of the added costs and complexities associated with third parties. Imagine transacting online peer-to-peer only, and across the entire globe.
How does Blockchain work?
The technology is called Blockchain because each transaction is stored in blocks of data that are linked like a chain. At the top of the chain is the most recent transaction, and as you move down the chain, it’s older and older transactions. It’s a powerful way to store data as the information is immutable. If anyone tries to manipulate a transaction it will cause the link to break, and the entire network will see what happened. That is what makes it so secure.
Who invented the Blockchain?
A person or group by the name Satoshi Nakamoto published a whitepaper online explaining the principles behind a new kind of digital money back in 2008. The cryptocurrency of course was Bitcoin. Every cryptocurrency since is an evolution of the ideas laid out in that paper.
Nakamoto’s goal was to create digital money that would make online transactions between two people anywhere in the world possible without requiring a third party. This required a new system. The solution is a network that is constantly verifying the movement of Bitcoin. That network of course became known as the Blockchain.
Every Bitcoin transaction is stored and verified by a global network of computers beyond the control of any person, company, or country.
What’s the future of Blockchain?
Blockchain today is looked at way beyond just decentralized finance. With NFTs booming, and the gaming industry adopting the technology, who knows what’s next for the technology. But one thing is for certain: Blockchain is here to stay and we’ll likely be seeing it used in many different industries outside of finance and art very soon.