An invention of a person bearing the pseudonym: Satoshi Nakamoto, blockchain enables the distribution of information over the internet without allowing it to be copied. The blockchain technology has come a long way since it was first introduced. Today, it is the basis for a new type of currency—a digital currency—cryptocurrency.
Ever head of Bitcoin? You probably have! Bitcoin was the reason the blockchain technology was invented. But today, the technology is being used for a lot more. Blockchain is like the internet in the sense that you can use it without knowing how it works. However, finding out how this technology works won’t do you any harm. In fact, it will do you a world of good. So, without wasting any more time, let’s look at how the blockchain technology works.
How the Blockchain Technology Works
Knowing how blockchain works isn’t necessary for using it but a bit of knowledge is always good. So, here you go. We’ll start things off with a definition of blockchain by Don and Alex, two people who co-authored a book on blockchain called ‘Blockchain Revolution’. Following is how they define this technology:
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
The above definition of blockchain gives a good idea of what can be achieved with the technology. But, we won’t leave you guessing instead we’re going to tell you exactly what can be achieved with blockchain. Before we get to that, let’s take a quick look at how the technology works.
A type of a distributed database, blockchain is like a mammoth, spreadsheet that is available to users across the globe and can run on millions of computers simultaneously. As it is open source technology, anyone—including you and me, can alter the underlying code and unveil what’s happening. Since it is a true P2P technology, blockchain authenticates or settles transactions without the help of any intermediary at all.
Blockchain is a globally distributed database that uses futuristic cryptography to record any transaction done by you over it. But, what else does this database record? In addition to the transactional data such as who paid who or who married who, it can also record any structured information. The world is fast moving towards the Internet of Things, and as such, having a blockchain system for settlements will soon become necessary or mandatory or however you want to say it. The blockchain technology is going to enable the settlement of trillions of transactions in real-time between connected things—something that banks don’t have the capacity to do. For this reason, the blockchain technology is nothing short of extraordinary.
A platform that promotes trust and truth, blockchain is a stable database of virtual belongings that cannot be hacked. This makes blockchain the ideal transactional technology, not just for the financial-services industry, but also for the society in general. And, the next section is where we discuss how blockchain can benefit the world.
How Blockchain Can Benefit the World
A one of a kind technology, blockchain can be private or public. The popularity of this technology can be gauged by the fact that by 2024, the global blockchain market is expected to be worth over $20 billion and these are just conservative numbers, it could be a lot more! So, what are the qualities of the blockchain technology that are attracting people to it—Not just people from the finance industry, but also people from all professions and walks of life? Without wasting any time, let’s get straight to the answers.
Blockchain is making the world more efficient, and there’s no doubting this. Transactions are settled quickly on blockchain and there’s a reason for it— digitized information is used and no intermediary is required to complete the transactions between the relevant parties. And, the good thigs keep rolling in. In addition to enabling the completion of transactions without an intermediary, blockchain provides the ability to run ‘smart contracts’. To fulfill the criteria mentioned in the contract, these contracts automatically activate commercial actions. This streamlines the processes considerably, which in turn save time and money.
One of the major advantages of the blockchain technology is enabling better traceability. With this technology, you can track where an item is currently residing by tracking goods forwarding. And when the item changes hand, any information related to it can be communicated to or from the new handler for possible action.
Blockchain makes transactions more secure, but how exactly? You can as good as assure the authenticity of the information in a blockchain. The reason is that a complex cryptography that is verified independently is used to verify each transaction within the network. One of the keys to unlock the benefits of the Internet of Things (IOT) is authenticated information. To protect IP and verify instructions, the defense industry is currently using a version of blockchain. So, the use of blockchain to ensure security over the internet has already started.
The final way blockchain can benefit the world is enabling feedback. Blockchain enables the traceability of a product throughout its lifecycle, allowing manufacturers and designers of the product to manage their products through their life and in turn make them more effective. This is good not just for the manufactures and designers of products, but also for the people using them.
Blockchain technology is changing the world, and the sooner you move to it, the better it will be for you. The reasons are given above.
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