What is Blockchain?
Bitcoin. Blockchain. Cryptocurrencies. Initial coin offerings.
The media can’t stop talking about them, but do you really understand what these terms actually mean?
Don’t fret and there’s no need to feel embarrassed if you don’t know, as few people understand what these terms mean, but Wall Street banks, IT organizations, and consultants are buzzing about blockchain technology.
It’s hard to remove blockchain from Bitcoin, but if we were to define “blockchain” as a technology separate from Bitcoin, it could be interpreted as follows:
“Blockchain technology is a unique database architecture, which offers a way for untrusted parties to reach agreement (consensus) on a common digital history. A common digital history is important because digital assets and transactions are in theory easily faked and/or duplicated. Blockchain technology solves this problem without using a trusted intermediary (such as a bank).”
Where else might Blockchain make sense?
For the moment the short answer is in unique instances but this will change going forward.
Specifically using Bitcoin as an example, a blockchain is needed because:
- Bitcoin is a public ledger of bitcoin transactions
- There are trust-less nodes recording transactions on the Bitcoin ledger
- Bitcoin does not want to trust a third party to administer the ledger
Effectively, Bitcoin uses a blockchain to decentralise payments. Where else could we use this unique database architecture to get rid of the middleman? Are there other things that could be decentralized?
Any scenario where everyone needs a record of ownership, and where a trusted third party isn’t preferred can basically be a Blockchain use case.
Originally posted February 15, 2018 — Mawdud Choudhury, CEO, Meedah Group Limited