What Is BlockChain Technology: Simply Explained.
Bitcoin, Ethereum, Dogecoin?! These are some of the most popular cryptocurrencies on the market that you might’ve heard of but do you know the technology behind it? This will be a simple explanation on Blockchain.
Intro
In 1991, Stuart Haber and W. Scott Stornetta came up with a secure way to timestamp digital documents that can’t be tampered with and that technique is known as Blockchain today. This technique would rarely be used until a group of developers that goes by the pseudonym of Satoshi Nakamoto adopted this technique in 2007 to create a digital decentralized currency later in 2009 named Bitcoin.
Blockchain
Blockchain is basically a digital ledger that is distributed in a P2P network. It uses Hashes to store some information on the Block and once the data changes, the hash will change as well. So let’s look at the chart above and say Block #2 has been tampered with thus making the Hash value change and the system can check Block #3’s previous Hash value and if the Block#2’s current Hash value doesn’t matches up then the system will know the change in Block#2 is incorrect and invalidates it.
Proof-of-Work
Knowing that modern computers can handle thousands of equations per second, Satoshi Nakamoto came up with this algorithm that checks the changes in the ledger roughly every 10 minutes to see if all the data is valid, thus preventing users from sending/receiving incorrect amounts. These checks are made by ledger owners you probably know as crypto miners, they are rewarded a certain amount of coin for their processing power to check the whole Blockchain and only add new blocks if everything is valid.
Decentralized Currency
Since Blockchain is an open P2P network, this makes it a great decentralized currency platform. Decentralized currency just means that the monetary value is not controlled by one single entity such as the US dollar revolves around the US Government. I believe Bitcoin was invented due to the financial collapse of 2008 when the US government bailed out all the housing companies that gave out billions of dollars in loans that just simply wasn’t there. This left a sour taste in Satoshi Nakamoto’s theoretical mouth knowing that the inflation of money is only controlled by the few in power in the government.
New Technology
With the rise of crypto currency, Blockchain has been adopted in many other businesses such as the Medical Industry to track patient’s medical data securely, businesses like Walmart use Blockchain technology to keep a safe record of products coming in and out and even big banks use blockchain for the same purposes of cryptocurrency.
Conclusion
Blockchain is a secure solution to keep a digital decentralized ledger maintained by everyone in the P2P network. I hope this was simple enough to understand for everyday consumers. I wrote this blog because my significant other asked me what Dogecoin is and why she keeps hearing about it. This has only been a simple beginner’s explaination, I will write another blog in the future to deep dive into blockchain and explain newer concepts such as smart contracts.
