“As revolutionary as it sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on the main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.”
– Ian Khan | Author | Technology Futurist and TedX speaker
It is no longer news that giants in the banking industry have placed a ban on the use of credit cards for the purchase of cryptocurrency. Since its emergence a couple of years ago, cryptocurrency has slowly become more popular and more people are doing transactions with Cryptocurrency as the standard of exchange. Before going on to the more technical areas, I would love to give background information on what cryptocurrency is. Thereafter, we can proceed to look at its role on the blockchain.
Whenever you think of blockchain what comes to mind?
Does it just seem like some strange lingo resembling something from a science fiction movie?
Well, blockchain is simply a secure digital ledger where transactions are recorded and shared amongst the parties involved. It is a chain of networks that are globally spread across powerful computers that record, verify and monitor all transactions. Transparency is a huge plus when it comes to the operation of blockchains, the system is trusted to act according to how it has been programmed.
The first cryptocurrency was introduced in 2008 and it was developed by the Satochi Nakamoto group. This invention was a response to the financial crash that rocked the global economy in the same year. Bitcoins serves as an open source of decentralized data and it was developed to act as a suitable alternative to the otherwise centralized government-controlled currencies. Bitcoins and other cryptocurrency work in a safe and transparent way with the help of blockchains.
The database for blockchain storage is not restricted to a single server. Instead of this restriction, blockchain information is simultaneously stored up and the information is updated constantly with the use of nodes. Nodes are simply any computer that is connected to the blockchain and processes the information upon which the value of the blockchain is generated. The recognition of the recipient of every single bit of transferred information is done through a double encryption system.
Each block is verified through the independent verification of every block by using various nodes through means of algorithms. Each block is verified against earlier blocks and the risk of compromising information is relatively low. In the case where someone wants to be malicious and change even the smallest unit of information, the system would spot this change. The change is spotted through a change in the fixed length output; this method makes it impossible to falsify information. The fact that information is immediately uploaded to all nodes upon validation makes blockchain a very transparent system. The chain grows longer with each block and as it grows, the information held is still available to users with the right access keys. A blockchain is keeps growing because previous blocks are an important part of the chain that cannot be amended. All audits and digital paper trails are done in an automated manner.
In understanding how blockchain works, you will need a lot of imagination in understanding how this piece of technology works. Think of blockchain as a shared document, which is verified and highly encrypted. Now, imagine that every entry into this sheet is dependent on a relationship with its predecessor. Are you there? Yes, that’s a rough picture of how blockchain technology works.
The blockchain is a decentralized system where there are no intermediaries when it comes to the relating of information to customers. There are certain computer protocols that need to be implemented in order for this intermediary-free interaction that is strongly backed by software.
I think the answer is pretty obvious, don’t you? Blockchain technology offers a tamper-proof log for your transactions. Its framework and fundamental code create a secure, digital financial process. This is basically your bank without bureaucracy, time wasting and paper lifting. Now that you have a full understanding of what blockchain technology is, how it works and how it’s used. There is one final question you should be curious about.
A lot of people have described blockchain as the greatest invention of man after the internet. Blockchain allows users to exchange values without the need for a central authority. Blockchain works differently because it depends on collective security and the value is regulated by so much more than the forces of demand and supply.
Blockchain technology is used for much more than the creation of digital currencies. A blockchain is a special kind of database that can store any kind of data.
If you are wondering what the fuss is about when it comes to the blockchain, then I suggest that you read the next sentences closely. Blockchains are amazing because the integrity of the contents on the distributed ledger does not rely on any single party. The collective trust that is placed on the blockchain system is what makes the system so strong. Blockchain aims to deal with the flaws of the current banking system (a major flaw is that banks act as middlemen and charge for their services). With blockchain, transaction fees are significantly reduced because banks are left out of the equation.
The application of blockchain technology is countless. Its uses range from the banking sector, the internet, our shopping and a lot of other online activities. Blockchain can work for virtually any kind of transaction as long as it involves value. The potential uses of blockchain are numerous
Cryptocurrency is simply a set of digital tools of exchange that use blockchain technology and cryptography to facilitate secure and anonymous transactions. Blockchain can be used to do many things with less stress; from banking to the internet of things amongst other things.
Blockchain can be used to revolutionalize the way we keep health records and cryptocurrency have played in great role in the prominence of blockchain. The blockchain is the platform through which cryptocurrency comes into play; blockchain is the technology that serves as the distributed ledger from which the network is formed. This network creates a unit of the transaction through which values can be transferred.
Cryptocurrency are the tokens that these networks use transfer value from one user to another. Therefore, with the continued popularity of cryptocurrency, the blockchain can only grow. Cryptocurrency are part of the blockchain ecosystem and they go hand-in-hand because cryptocurrency is needed to transact on a blockchain. On the other hand, without the blockchain, there would be no way to record or transfer these values.
Blockchain can help us handle certain problems well, also it can also be used to reduce costs, improve workflow and so much more.
You do not need to know a lot on the use of blockchain and the effects that cryptocurrency has on the value of blockchain. Blockchain cuts of the role of middlemen and makes transactions easy and straightforward for all to see. Identity is very important when it comes to online transactions; therefore, the structure that is used for management of identity by blockchains can find people’s real identity.
As far as secure transactions are concerned in the cryptocurrency world, blockchain technology is the future.
Blockchain and cryptocurrency are tipped to show the blueprint for a more advanced democratic, independent and transparent society. The decentralized structure of these technologies is bound to shape the way the coming generation with handle finances and other things.
The situation with blockchain technology today is similar to what we had in Silicon Valley during the early 1990s. The similarity lies in the unending potential that blockchain technology holds; the only limitations that exist with blockchain technology are the limitations in your mind.
“Blockchain solves the problem of manipulation. When I speak about it in the West, people say they trust Google, Facebook, or their banks. But the rest of the world doesn’t trust organizations and corporations that much — I mean Africa, India, Eastern Europe, or Russia. It’s not about the places where people are really rich. Blockchain’s opportunities are the highest in the countries that haven’t reached that level yet.”
– Vitalik Buterin, inventor of Ethereum