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What is the blockchain?

How does the blockchain work? Is blockchain the future?

Foto door Olya Kobruseva via Pexels

The blockchain is a distributed database, which means it consists of multiple copies of the same information. These records can be shared across many different networks and devices that are linked together through various software applications.

As such, the blockchain is decentralized. Decentralization means there’s no one person or organization in charge of the data on the network. That is why it may be the future. I will come back to this later in the article.

How does blockchain work?

The blockchain is a worldwide distributed database, existing on millions of computers. It’s a digital ledger that is transparent and secure. This technology underlies all cryptocurrencies like Bitcoin, and has a wide range of possible applications. The blockchain makes it possible to transfer data in a way that is totally secure and anonymous. Nobody owns or controls the blockchain because it’s completely decentralized .

Traditional databases and blockchains

Every day in our lives we have to deal with registers, ledgers and important data. In the past, this information was neatly written down in a thick book, but nowadays digital databases are preferred for storing information. Because it is undesirable for just anyone to be able to view and modify all information, these databases are usually managed by a single party.

It is of fundamental importance that this party is trusted by everyone. The owner of the database has absolute power and therefore the possibility to change or delete all information without anyone else knowing.

A blockchain differs from this traditional digital database. The information in a blockchain is not owned by one party, but by a large number of different parties connected to the blockchain network. Each participant on the network is in possession of the entire ledger, but at the same time no one is the owner. A blockchain is managed by many people together. Each party in the network is not connected to a database, but to each other. This is called peer-to-peer.

Can a blockchain be hacked?

As described above, transactions are added to a blockchain on a ‘most votes count’ basis. The moment more than 50 percent of the processing power of the people connected to the network considers the transaction legitimate, it is added. This also applies to changes in a blockchain network. If a malicious person wanted to add or modify a transaction, he would need to have more than 50 percent of the processing power of the blockchain network. So the more people that are connected to the blockchain network, the more securely transactions are stored.

Different types of blockchains

As previously described, a blockchain is in principle decentralised; the previously described blockchains assume a public blockchain. However, there are two variants of this blockchain type. These are the private and consortium blockchain.

Public blockchain:

A public blockchain is the best known and most widely used. Public blockchains are fully decentralised and open-source, which means that a public blockchain complies with the ‘distributed ledger’ principle. Anyone can participate in the network and anyone can view the code used to write the blockchain. Anyone can send transactions over this blockchain and can assume that these transactions will be recorded in the blockchain. Because more people are usually connected to a public blockchain than a private or consortium blockchain, public blockchains are often more secure.

It was described earlier that one person will need to control more than 50 per cent of the computing power of a blockchain network in order to make malicious changes. The more people are connected, the higher the legitimate computing power of a blockchain network is. Thus a malicious person needs much more computing power. An example of a public blockchain is the Bitcoin network.

Private blockchain:

Completely opposite the public blockchain is the private blockchain. A private blockchain is, as the name suggests, a closed system. It is not possible for everyone to become a member of the network. The right to add information is restricted to a select group. A private blockchain has an owner, who determines who gets access to the blockchain. Because the method of storing data is still a chain of transactions and there are several connected parties, the term blockchain is still used, but it is not completely decentralised. A blockchain network that is only accessible to employees of a company is an example of a private blockchain.

Consortium blockchain:

In between the public and private blockchain is the consortium blockchain. A consortium is a collaboration between various parties, such as banks or companies. A consortium blockchain is therefore a blockchain that was created as part of a partnership. The blockchain is not public, but does have multiple owners. Sometimes a consortium blockchain can be viewed by anyone, but not everyone has the opportunity to change data. An example of a consortium blockchain is the Ripple network.

Foto door Roger Brown via Pexels

Is blockchain the future?

Blockchain is a revolutionary technology. It has the potential to change the world as we know it, and somehow, we’re only just scratching the surface of it. The question is: how long until blockchain becomes part of our everyday lives? There are a number of factors that are going to determine when blockchain goes mainstream: regulatory issues, security, scalability, and standardization to name a few. It’s hard to say for sure when blockchain will become mainstream, but one thing is for sure — it will be a game changer.

Personally, I think Blockchain is the future. Many professions and things will be taken over by technology and rabots, such as bus drivers. There is a good chance that this will be taken over by a robot. With self-driving cars it works the same way. Personally I think we will be controlled by the blockchain and no longer by the banks.

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Jort Janssen

Jort Janssen

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My name is Jort. I am a starting entrepreneur. I write about entrepreneurship, my experiences and crypto. Of course I write about things I like.