When you cast your vote these days and your candidate loses, do you ever wonder if your vote actually counted?
If you’re chatting up somebody online, how do you know they aren’t catfish or scammer?
When you buy organic food online how can you be certain that it’s not genetically modified?
To really feel secure about answering any of those questions, you need a way of recording the data, a way of verifying the data, and a way of securing that data so it can’t be tampered with or altered without the whole system becoming alerted to changes made. That way nobody could corrupt the system by editing the records falsely because everyone would be on high alert. These kinds of systems are already being developed and the technology that drives them is called the Blockchain.
Blockchains store information across the network of computers called nodes. In this way, the information is decentralized and publicly distributed. This means no hoarding of information by private corporations or individuals, everyone can use the information to benefit. This is significant because no one person can seize control of the system or corrupt it for personal gain.
People use their nodes (computers) to hold transactional information from others in clusters known as blocks. The chronological ordering of these blocks is called a chain, hence the name blockchain. The Blockchain uses a mathematical algorithm called cryptography to secure the records so that once recorded the data cannot be changed by anyone else unless they are in Oracle with magical powers in the digital world of course.
The most famous of Blockchain applications is a decentralized digital currency called Bitcoin (BTC). Now making its way into the commercial markets, big coin‘s track record comes from its notorious use on the deep web. Legend has it someone once bought two pizzas with 10,000 BTC! The value of Bitcoins came from avoiding the three days for transactions to clear and the fees associated with using central banks and credit card companies. With Bitcoin transactions clear within 10 minutes to an hour; and once you send a bitcoin you can’t send the same bitcoin to another person, thus avoiding double spending and insufficient funds fees.
To accomplish this, miners holding nodes lend computer processing power to the Blockchain, thus reducing the time it takes to validate and verify transfers of Bitcoin from one while it to another. The cryptography algorithm is deliberately complex and uses significant computer processing power to perform its tasks. This difficulty makes the system hard to hack. The cryptography algorithm creates a digital signature for each transaction that mining software verifies in order to validate the transactions. The mining software goes through a lot of computer code to verify the correct digital signature known as a hash. The miner who finds the digital signature hash first gets a block reward, payment in Bitcoin.
Bitcoin’s blockchain basically stores records of ownership of the cryptocurrency. In this way, only one person can hold a Bitcoin at a time. A Bitcoin cannot be spent twice by the same person nor can it be counterfeited like paper currency.
Bitcoin was just beginning for the Blockchain. The future includes blockchains that manage and verify online data according to smart contracts, enabling us to launch companies that are completely run by the algorithm. This means more security over online data, rating and recommending of better products; you can even track your music whenever it gets played on the Internet allowing you to reach more fans and supporters.
These innovations and more await us!
To learn more about the Blockchain, cryptocurrency‘s, ICO’s, smart contracts check out www.runtheblockchain.com