you must have once in a life surely heard a word called blockchain. Many people find it confusing and many don't know is there is difference between bitcoin or blockchain. First of all, let me make you clear, bitcoin is a use case of blockchain, which is a technology as email is a use case of the technology internet.
In this article, I will try to explain what blockchain is, in a simple way so that, anyone of you will be able to understand what blockchain is and why is this technology so much game changing!
What is blockchain?
Before knowing what blockchain is, think of a ledger or a register book to keep track of what happened. For example, who paid how much money to whom, how much balance is left in his wallet and is he trying to double spend the money. (Money is just an example, blockchain can be used in many other places.) Let us think there is a big ledger which keeps record of everything about who transferred money to whom, how much balance is left in their wallet and all the details of everything in a single ledger from which everyone can excess the data.
Because of everyone is keeping track of that ledger, if anyone tries to misuse that money then he will immediately be caught and he won't be able to do transaction. But practically, making this big ledger is impossible. So, we have this technology called blockchain, doing exactly same thing but in an efficient manner!
How blockchain works?
Let me give you a typical example of the blockchain of bitcoin. Let us suppose I transferred 1 bitcoin to my friend. Then the public key of transaction I just did will be registered to be verified by the entire network using bitcoin network. My public key, my friend public key and the amount of bitcoin I sent will be registered in a block. Everyone in the bitcoin network is responsible to verify the transaction of that block.
Who are miners?
Mining is the process which verifies transactions in the bitcoin network. Everyone who is mining have a computing power which constantly do a guess of how to solve a block problem. When someone finds the mathematical solution to the problem, everyone will agree to it. When 50% of network verifies that the block is true and the miner has solved the problem correctly, then it will be registered as a new block. Then, the network will subtract bitcoin from my account and add bitcoin to my friends account.
Those who are involved in the process to verify the transaction of bitcoin are called miners. Miners get rewarded with newly generated bitcoin. There are 17 million bitcoin produced till now and right now around 12 bitcoin is produced each hour. The more problem someone solve, the more they will be rewarded. Production of bitcoin per hour will decrease with time so eventually it will stop the production of bitcoin after certain amount of time.
Why we need blockchain?
Internet of value!
The internet we have now is the internet of data, in this internet we can send a copy of our data to someone. That means, if we send photo to someone, we now have a copy of the photo and our friend will have another copy of the photo. In cases of money, agreements and many other things this is a broken system. Imagine me sending 1000 rupees to someone and now he and I both will have 1000 rupees. Blockchain solves this issue by creating a internet of value.
Decentralized and trust less system!
We trust banks for our money, Facebook for our data and a lot of trusted third party for things which are very important to us. But if we look at history all of this trusted parties have broken our trusts a lot of time. Blockchain creates a trust less and decentralized option for everything. This trust less system can be used in voting where there is more corruption, fundraising and almost everywhere trusting third party is required now but can be eliminated with blockchain.
Problem with money
Most people know blockchain as bitcoin and bitcoin as money of the internet. And it is true, bitcoin is money of internet but bitcoin is not blockchain. Bitcoin as an use case of blockchain will solve huge problem which is associated with money. "If people know about the financial system of present world, we will see revolution the next day." Henry Ford.
Almost everyone believes our financial system is broken and it needs to be replaced. The money we have now is printed as much as government like and this is effecting peoples from the country. We have seen situations in many country that they need to carry loads of money just to buy groceries. This can happen in any country if some day a highly corrupt leader comes there. Bitcoin prevents that.
Today, we need to wait a lot of time, sometimes even a week or even month for money to be transferred internationally with paying high fees. The more bigger amount it needs to be transferred, the more fees, delays, processes, verification and permission things to be done. But with bitcoin, it is safe, fast and there is no need of verification and permission.
Simply, we can be our own bank!
Smart Contracts
We do a lot of contracts daily but we either need to trust the guy with whom we are doing a contract or we need a third party to verify and back up the contract. But with smart contracts like ethereum's smart contract, we can do contracts in a smarter and safer way without the need of third party. Let us suppose, I want to give all of my ethereum I have to my father if I die with some accident. Then I can set up a smart contract like, "If I do not login for 1 year, transfer all ethereum I have in this wallet to this wallet." We can generate a code for this and now we have trust less system without the need of any third party or any money spent. Some companies like Matrix AI network is even making systems where we don't need to code to make smart contracts, this will be next big step in blockchain.
Supply chain
Let us suppose I bought a shirt with a random guy with Zara logo in the shirt. How can I be sure of is that shirt really made by Zara or is it a fake company product. Zara can register everything happened to the product from it's starting to end in blockchain in every steps so that we can now excess the information about the shirt. This principle is called supply chain and projects are Vechain are making supply chain to be secure and accessible for everyone. This will make every products in the market safe, secure and trust less. Just scan the code or type in number for the product to see where it came from, how it was made and how safe it is. This is another disruptive field for blockchain.
New Internet
As we are going to see an age for Internet of Things where all of our devices will be connected to the internet, we have seen a broken internet model. Blockchain companies like Elastos are planning to make their own decentralized internet for everyone. This will open a door for Internet of Things to really shoot off.
Social media
Social medias now are earning a lot from their content creators generated value. Platforms keep more than 60% to 100% of revenue from their creators and the worse case, they are selling the data of their users in serious situations like election. Social media is highly centralized, censored and of no value. We are not free in any social media and advertisement are really annoying to most of us.
With blockchain social media platform like, steemit, weku, dtube, vidsocial we are now have a censorship free, ads free, decentralized social media from which we can generate values for our selves and there is no change for a privacy hack or data selling. This is still in development but the future of decentralized social media looks bright!
Blockchain is the future and the most exciting technology human kind have ever seen and will change the world in such a way that internet changed it. With so much of use cases it can easily replace old system, cryptocurrency is by far the biggest and well known use of blockchain but it is not the only one. There are a lot of projects and lot of things going on in back end of the technology. Blockchain is here to stay, cryptocurrencies are here to stay!