Blockchain
“Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.”
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What is blockchain?
The deal of Bitcoin.
Why one should give a thought to Bitcoin?
Fungible and Non-fungible
Understanding the terms of Blockchain.
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What is blockchain?
In simpler terms Blockchain is a system of recording information in a way that is nearly impossible to reach, modify, hack or even cheat. The recording information of the system if considered could be the bitcoin or any other cryptocurrency linked across several computers in a peer-to-peer network. Bitcoin was not the first form of cash advised, but it was the first one to solve the double-spend problem. The blockchain was invented by Satoshi Nakamoto, who mainly highlight in his paper-
- A new form of digital cash came to be known as “cryptocurrency”.
- A secure way to handle electronic transactions with no central authority.
For the second point let me explain to you with an example-
Eg. If you had to send money from India to America, you would first likely converse with your bank (which acts as a central authority), after which a fee is charged and the transfer is completed. But bitcoin has no registrations in any country and does not need any bank like a central authority to carry out its transactions.
Now, why the word Block “Chain”?
That’s because every new block that is created is very cleverly linked to all the earlier blocks before it (by storing the address of the previous block, into the new one), creating an ever-growing chain of blocks, leading right back to the first block ever created of bitcoin, mined in 2009. The first block is known as the “Genesis block.”
Now that we are talking about blockchain and bitcoin, what is bitcoin?
The deal of Bitcoin-
Bitcoin is a cryptocurrency whose database is backed by blockchain technology. While bitcoin is about promoting anonymity, blockchain holds transparency.
Here’s the deal so, today’s e-commerce works just fine, but they are far away from perfection. They are just an electronic version of the paperwork performed before e-receipts came into the picture. What’s more, to complete transactions, you not only need a bank account but sometimes a credit card as well. When you approach a bank for transactions, the transfer fee may vary from 7% to 20% depending on the country and the region.
Why one should give a thought to Bitcoin?
While as for the Bitcoin the transaction fee is barely applicable since the transfer is direct. So the main purpose is to streamline the world of monetary payments and transactions by getting rid of the unnecessary middlemen and charging the most minimalist fee for the transactions.
What may perplex you, even more, is that Bitcoin has no board of directors or anything like a corporate/non-corporate firm. Neither does it fundraise? It’s a community of stakeholders, people who won Bitcoin, and also those who sustain the network by generating it.
Fungible and Non-fungible-
Bitcoin is a fungible unit of value exchange. This means the unit can be divided into smaller units, and every divided unit has the same value as that of any other unit. For instance cash. 50 rupees can be divided into two 25 rupees, five 10 rupees, and one 50 rupees. Now while paying for chocolate which costs 50 the shopkeeper does not care how you pay, whether it’s 50 rupees or five notes of 10 rupees.
But not everything is fungible, for instance, a car is non-fungible. Neither is a house. There’s no easy way to divide a house and who would want to get a half car or even a quarter of it?
Now that we are clear about what is Bitcoin and why one should consider it, let’s move forward to the highlight: Blockchain. Blockchain has many definitions but the most intact one has an abbreviation for the synchronized flow of Blockchain. So let’s comprehend them.
Understanding the terms of blockchain.
“Blockchain is a shared, decentralized ledger which is immutable, public or private, with or without permission, and transparent. Which in all facilitates the process of recording transactions and tracking assets in a business network.”
If you search up the definition of blockchain, you probably might encounter something like this, so let’s understand them one by one.
- Decentralized-
Now when we talk about centralization it simply means that one node is where all the data is stored, meaning a single point failure. That only puts the consumer’s private data out in the open, prone to a lot of damage.
While on the other hand, we have decentralization in several node distributions to several subnodes. This simply puts forth that it cannot be easily manipulated or interrupted by any one entity.
2. Immutable-
Immutable means something you can never erase- just like the scar that is left behind as well fall many times while trying to learn cycling for the first time. The same goes in with Bitcoin from the moment it was made — nobody can edit, delete, rewrite, or tamper with the transactions. Not Satoshi himself as well.
There will always be a permanent record just like your scar, of every transaction ever done. The blockchain just keeps growing because of this. But nothing ever gets deleted.
3. Public or Private-
Blockchains can either be public or private. If we talk about Bitcoin, it is open to the public. As we can buy, transfer, and participate in networking in several ways. Bitcoin doesn’t specifically have a form framed for a human or any limitations on who and when and where can use it.
On another base, if we talk about private blockchains they are usually set between trading partners in certain industries. For instance-
The farmers and food suppliers with Grofers, BigBasket, etc.
A better example of this could be, taking a walk in the garden — you don’t have to register or pay any fee while entering a garden or even taking a walk. But on the other hand, when you apply for any sports club or gym, you take their membership and the access is restricted to the members only. Now this can be an example of Private Blockchains
4. Permissioned or permissionless-
This could be regarded the same as the above, but what matters here is the fundraiser, it’s the permission that is granted. If spoken precisely most blockchains are permissioned due to the business need and cryptocurrencies are permissionless. Also, a private, permissioned blockchain will work effectively, as the permission is given only to the authorized access and won’t let anyone in.
5. Transparent-
This being one of the best features is about not hiding anything, so that every transaction you make is transparent and immutable. If you happen to be a node on a blockchain network you can readily see the history of transactions on the blockchain.
Eventually what we can understand is that Blockchain being an amazing technology can be used for varying purposes beyond electronic transactions. In just a few years since it came to the big picture, it has gained immense attention from entrepreneurs for the transactional platforms. As the world is growing, adaptability is presumed to be there. Here is why blockchain could grow in and beyond where it stands today-
- Insurance companies can report to government agencies faster.
- Land tiles could be transferred without any hindrance from the central authority, asking for a fee.
- Company registrations can be checked for due diligence
- School children and youngsters could be rewarded for using a healthier medium (walking or cycling) to reach schools and destinations.
- Globally strong cities could eventually start speeding up their bank settlements to see their cash flow faster.
Here we conclude, now you won’t be confused with the terms as well as the importance of –
Blockchain is indeed a vast ocean, but as a start to something we are good to go!
