The question “What is blockchain” suddenly became one of the most famous Google searches in recent years. Multitude of curious people keep on seeking for books such as “blockchain for dummies”, and also browse the internet trying to locate “blockchain tutorial” as well as “blockchain meaning” in order to comprehend what it actually is.
So what then is the Blockchain technology?
In simple terms, blockchain is data that are stored on a network of computers and are also maintained by a decentralized computer network.
This technology can radically alter the world and redefine the manner we deal with data and transfer value. For instance, blockchain enables their users to transfer digital money peer-to-peer without having to go through any bank or centralised system. It is also the technology that is able get rid of the middlemen in many traditional fields: insurance, banking, government, entertainment, and more. Even though Blockchains are still at their early stages of development, they are already being employed in real life for cryptocurrencies, and many more. Many people in both the public and private sectors are already exploring some of the potential use cases.
How do the Blockchain technologies work?
Let's consider the key points and the example of Bitcoin:
Blockchain technologies record Bitcoin transactions-related information, such as the source of the money and its destination, the transaction time, the actual amount, any additional fees paid, and many other data. All these information are saved in a chain of “blocks”, which are sort of containers. With regard to Bitcoin, each block (container) contains the data for approximately 2,000 transactions (as at 2017).
Blockchains are able to store multiple kinds of data: insurance records, details of cryptocurrency transactions, health history, car accident history, changes of ownership, the contents of a land register, and many others. Blockchains can also serve the purpose of being a platform for other applications.
Blockchains, as distributed and timestamped ledgers of all transactions, are saved onto decentralized (in most cases) networks of computers, also referred to as ‘nodes’.
Characteristics of Blockchains:
They’re pragmatically immutable, since changing any information would require huge computing power, and the longer a blockchain is, the safer it is.
They are transparent since anyone can see the data stored on the blockchain. Some blockchain technologies, on the other hand, are able to offer more anonymity.
They are mostly decentralized, which means no central authority exists – unlike the traditional databases that can be shut down or censored at the will of the owner. Should a partion of the network go down, a blockchain will still remain functional 24/7. However, blockchain projects with a more centralized approach also exists.
All these features and many others add up to offer hope that a larger percentage of the daily routines of the Blockchain users can become much more effective, transparent, rapid, and affordable.