What is Blockchain? A Simple Beginner’s Guide
You might have heard or felt the Blockchain buzz that has swept across the internet-world as well as offline. One tends to wonder why Blockchain’s popularity has arisen in recent times. Words like Bitcoin, Cryptocurrency, Ethereum and other cryptographic buzzwords are being thrown about and it is causing FOMO fever among techies and non-techies.
Even those who had had no business in tech, fintech or online products are feeling the peer pressure of inquiring all about the newest technology.
In all these, there’s been a lot of controversies and conspiracy theories about blockchain technology — whether it can survive through the fad or fade out. These dissents often accompany emerging technologies especially when it appears as something you cannot touch or hold.
Undoubtedly, blockchain is spearheading the next generation of internet and bringing trust in the way transactions are being made.
Blockchain technology has the potential to revolutionize the fintech industry as well as many fields. Web3 is already here and blockchain is its loveable baby. Now, let’s dive in to find out what Blockchain is all about.
Blockchain Explained
You probably have heard a lot about Bitcoin, Ethereum and other cryptocurrencies right?
In simple layman’s term, blockchain consist of a “block” and a “chain.”
Consider that you want to make a transaction to John. This transaction can be proceeded directly without any intermediary (such as banks). These transactions are made possible through ‘Hash’(a string of unique keys with numbers and letters). Every transaction made is recorded as a ledger. All the verified transactions are added to the ledger as “blocks”. These blocks link up to form a Blockchain.
These transactions are decentralized, transparent and secured because every node (the computers that check the validity of transactions) on the network knows about it. No single user has control over it.
Blockchain is the innovative technology behind cryptocurrencies like Bitcoin and Ethereum and aimed solving the issue of trust in transactions. The blockchain protocol uses a peer-to-peer network (P2P) to verify the data exchanges. Nothing can be altered in the system.
Brief History of Blockchain
Blockchain was earlier developed in 2009 as the technology behind bitcoin to allow it go public as a virtual currency. The idea was to facilitate the efficient transfer and payments of Bitcoin without a central control. This led to the creation of other cryptocurrencies such as Litecoin and Ripple.
Why Blockchain
Blockchain builds trust across a business network thereby increasing the efficiency of work. The technology put barriers in tampering or deleting information that has already been added to the chain. More importantly, it eliminates The 6 key concepts of blockchain’s potential are;
- Shared Ledger — distributed system of record shared across business network
- Smart Contract — agreements database that are encoded in a computer program and automatically executed with transactions.
- Consensus — every party on the network agrees to the verified transaction
- Permissions — ensuring that transactions are visible, secured, authentic and verifiable
- Transactional trust — it eliminates under deals when everyone is aware of the transactions in the block chain
- Lowered cost and speed of processing — it takes less time to execute transactions
Real-World Uses of Blockchain
Blockchain is the future and it is already making in-ways in most spheres of technology applications. Here are some of the real cases of blockchain technology
- Digital voting — will prevent voter-fraud issues
- Food safety — can use to trace the food products from origin
- Healthcare — sharing of patients’ encrypted information through blockchain
- Digital Identity — for compliance and verification by Governments
- Internet of Things (IoT) — payment channels, smart devices, property registration
- Insurance — payment of insurances claims
- Social Media — allows users to have control of the data they share
- Supply Chain Management — help in global trade deals, logistics verification
- Trade Finance — payment assurance for buyers and sellers
- Anti-Money Laundering and KYC
- Land Title Registration — could alleviate litigations on lands, and make records of lands accessible to all
- Stock Trading — Easy to conduct peer-peer stock transfers
- Rent A car — smart verifications
- Transfer money from central bank
- Weapons tracking — gun control is a real problem now. Blockchain can ensure transparent registry of all weapon owners and sales of weapons
- Track Counterfeit drugs — it ensure transparent records of authentic drugs
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