Beginners guide to Blockchain Part II: What is Blockchain?
Let’s answer the big question in the room: What the heck is Blockchain?
However before we do that I hope you first have read my article called “What is Bitcoin?” because it will give you a little bit of context for this one, you can click here and read it now (its a quick 4 minute read). If you already did that, let’s move forward.
What is Blockchain?
Blockchain is the technology behind all crypto-currencies. Blockchain is a technology that allows us to record information in a way that makes it difficult or almost imposible to change, hack or cheat the system.
In 2008 with the launch of the Bitcoin white paper by Satoshi Nakamoto (an unknown person or group of people) a new technology was born, this tech was later on called the Blockchain.
Now, with this explanation you understand what it does and how it benefits us by storing valuable information in a way it cant be corrupted. But the next question is: How does it work? And I love Richard Bradley’s, a Partner at Deloitte, simple explanation for it:
A person buys a computer with the purpose of storing the Bitcoin software and sharing it with everyone (this person is called a “node”). That computer has a file of transactions in it (a “ledger”). Now, two government accountants (let’s call them “miners”) have the same file on theirs (so it’s “distributed”). As you make a transaction, your computer sends an “e-mail” to each accountant to inform them of whats going on.
Each accountant rushes to be the first to check whether you can afford it (and be paid their salary “Bitcoins”). The first to check and validate hits “REPLY ALL”, attaching their logic for verifying the transaction (“proof of work”). If the other accountant agrees, everyone updates their file…
I remember the first time I read this concept and there where many words I did not fully comprehend so I took the trouble of linking words like “proof of work”, “node”, “miners” and more to full on articles that explain what they are, just go back to the word, click it and dive deep until you understand.
Now, this is the Blockchain process step by step illustrated in a very easy to understand way :
In a nutshell: Satoshi discovered a way where we can store databases and audit transactions through a system that can’t be corrupted, is fully anonymous but also fully transparent (you can see a person’s address and transactions but not their names in many websites like this one) and this has opened up a world of possibilities.
What can we actually do with Blockchain technology?
A lot. And I truly mean a lot. Here are some examples:
✔ Skip the whole banking system. Skip their fees, their bureaucracy and how invasive they have become with our data. Just use crypto-currencies instead, faster, cheaper, easier.
✔ We’ve created a DeFi ecosystem (Decentralized Finance) where you can get loans, borrow and stake money without any government involvement.
✔ We can store valuable data in a safer way. Government offices could start using blockchain tech to store vital information and it wont be corrupted.
✔ Blockchain created digital property, we can now own digital “stuff” (images, music, documents and more) and the blockchain will prove we are the only owners of it. This is the NFT revolution, we’ll talk more about it in another article.
✔ We will soon see companies without CEO’s or single owners. Through the second largest crypto-currency, Ethereum, we have the possibility to create Dapps (Decentralized Apps) and we will very soon see regular companies without owners. Imagine an Airbnb where there is no CEO and all of the trust is delivered by the system, this will be possible soon.
✔ We will have truly free social media and metaverse. Decentralization through Blockchain tech will allow us to have places where we can communicate freely without any type of censorship. This is huge.
And much more…
So to wrap things up. Blockchain is huge. HUUUUGE. And I truly hope this brief article gives you that little kick we all need to start going deep into it, researching it and finding a way to be a valuable asset to the ecosystem.
Want to learn more? Remember to read my article on “What is Bitcoin?” and when you’re done read the next one: “What is Ethereum?”.
Peace out. Follow me on twitter: @thechrispace and see you soon.
Chris Pace.
