Basic concepts of Blockchain technology for Dummies
“If you have the internet on your device, you don’t need a middleman’s advice.” This could be Blockchain Technology’s official slogan. Wait, did I just compose a punchline? *Giggles*
Hey, fellow Dummies! Xeca, here! It’s Chapter 1.1 of our ChatGPT-structured roadmap to explain crypto & Web 3.0 for Dummies. Our focus today is on this question:
What are the basic concepts of Blockchain technology?
Well, you read it in the headline: Blockchain cuts off the middleman. That’s just one of blockchain technology’s basic concepts, though. There are more. We’ll find out shortly. But first, here’s some tea on middlemen:
Middlemen facing the chop because of Blockchain Technology
The definition of Blockchain
Blockchain is basically a system that enhances trust and security by recording transactions digitally via Distributed Ledger Technology (DLT). If this doesn’t make much sense to you yet, that’s alright. Read on.
Blockchain technology concepts
Blockchain technology uses math and cryptography to process transactions directly between a sender and a receiver. Think of it as giving a call or sending a letter via email to someone. No telephone operator or mailman is needed — unlike in the old days.
The system provides an “Open Decentralized Database”. Does this sound too technical? Relax, dummies. It’s simply a term to describe what Blockchain technology provides as every transaction involving value is listed.
The “decentralized” part describes the fact that those transactions are stored across a network of distributed computers. This defeats the concept of centralization where info is stored by one entity or on one server.
Now, for a transaction to be stored across a network, it first has to be crosschecked and validated by the majority of the network’s computers. The fancy term for that “validation agreement” is “CONSENSUS”. You’ll hear it a lot in this field.
Blockchain technology puts communities FIRST. A network’s entire community can verify records through the open decentralized database.
Don’t confuse blockchain and cryptocurrency. Yes, cryptocurrencies function through Blockchain Technology. However, money transactions aren’t the only cause for which this innovation can be used. There’s more to Blockchain Technology than cryptocurrency.
Top 5 sectors Blockchain Technology can be used for:
- Money: Cheaper, faster, and anonymous money transactions
- Goods: Enhancing the logistics for the documentation and delivery of goods
- Work: Secure sharing of data at work/in business
- Real Estate: Property selling/purchase and verifying the property’s ownership history to avoid litigation issues
- Voting: Anti-fraud, cheaper, and faster voting processes
How blockchain is useful
Blockchain technology isn’t just a “phase” or a trend set to disrupt societies for the sake of it. It’s an innovation for the world’s greatest good. It’s a system with real-world use cases.
The earlier blockchain technology is adopted globally, the better for humanity’s welfare. I leave you with this animated video explaining blockchain technology. No scary jargon. Just simple English and analogies so our dummy brains can understand and expand.
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