If you are just venturing into the world of cryptocurrencies, you must have come across some new terminology. Blockchain is one such term and since it is very critical to the crypto markets, let us take some time to understand what it is.
But before we do that, we need to mention that this concept is literally tied to cryptocurrencies, but many other industries are trying to adopt it, and use it, so they can work smoothly, without any breaks due to things that don’t depend on them.
So, here we go:
What is the blockchain?
A digital ledger in which transactions made in Bitcoin or another cryptocurrency are recorded chronologically and publicly. The original use case for this new technology was the cryptocurrency Bitcoin, but blockchains can be programmed to record not just financial transactions but virtually everything of value, including all the valuable information related to particular transfers, so the things can be tracked down if needed.
The term blockchain refers to the new way of structuring data that has emerged with the invention of Bitcoin, but it can signify more than just this specific use case. We consider blockchains as a particular type of distributed consensus system, one that relies on cryptography (and other techniques) to allow mutually untrusting parties to agree on a common state.
But first, a little history! In October 2008, Satoshi Nakamoto—the pseudonym of the inventor(s) of Bitcoin—published a paper proposing a new electronic cash system that he called Bitcoin. This system used novel technology to allow payments to be made directly from one party to another without going through a financial institution. The key innovation was a distributed database or ledger, which maintained a continuously updated record of all transactions.
To understand blockchain technology, we first need to understand the basics of Bitcoin. Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain.
Bitcoin was invented after decades of research into cryptography, metzdowd.com, and blockchain and is the first fully implemented decentralized cryptocurrency. There are many platforms that allow users to buy and sell cryptocurrencies like the BitcoinLoophole website.
Creating a New Blockchain from Scratch
If you want to understand how blockchains work, first you should understand that there is no one specific blockchain. The term refers to any type of infrastructure that implements the blockchain data structure. The original and most well-known implementation of a blockchain is the Bitcoin protocol, which you may know as the technology underlying Bitcoin.
The result is a new type of web. Originally devised for the secure exchange of Bitcoins, blockchain technology can be used to securely track anything of value. It can be used to build a new type of internet infrastructure where users can exchange any kind of data, verify its authenticity, and do so in a tamper-proof and secure manner.
Bitcoin is just the beginning. The blockchain protocol has the potential to create new types of networks and applications that we cannot even imagine today. Developers are only starting to scratch the surface of what is possible with this new technology, and they will surely find a way to incorporate it in almost every field of everyday life.
Applications of Blockchain
There are many potential applications for blockchain technology. We can divide these into three categories: financial applications, non-financial applications, and governance applications. As a matter of fact, a lot of institutions, banks, and companies, are already trying to implement it in their job. It’s pretty useful for sectors like economy, education, healthcare, and eCommerce. It’s also good for remote workers and freelancers, who can choose to get paid in some cryptocurrency if offered.
One of the most obvious applications of blockchain technology is in the area of financial transactions. The original Bitcoin protocol was designed to create a new type of currency that could be used to easily and securely pay for goods and services online. But the blockchain protocol can be used to track any type of financial transaction, including payments, loans, and asset transfers.
Some interesting blockchain facts
As you can suppose, all these things come with some interesting facts, and probably most of the people aren’t even aware of them. But, they are amazing!
– Only 0.5% of the people who use the internet use blockchain too, in some known form. And that’s at least 18,850,000 people! Isn’t that magnificent?
– Since 2018, there are national banks that are exploring options to incorporate similar technologies.
– There are tech giants who are already into all of this, or at least they invest in the blockchain development.
– Blockchain ensures that the transaction fees are a few times lower than those by the traditional economic and bank systems.
– Do you think it can’t get any bigger? Wait until you hear this! By the year 2024, it’s expected that this market will generate about $20 billion of revenues every year. Just wow!
– New cryptocurrencies are developed every day. And there are thousands of them, that are based on blockchain and tokens. They can work in different ways, but we can’t forget how all of this started more than a decade ago.
– There are books and educational documentaries dedicated to Bitcoin and blockchain. And they are widely available for everyone who is interested to go deeper in this field.
– Many celebrities are into this. And they aren’t ashamed to talk about their activity.
– It’s named blockchain because the generated blocks are virtually close to each other, so they can form something that looks like a chain.
There is so much to learn about blockchain technology and this is just an overview of what it is all about. Keep learning and understanding the world around you. This is a very instrumental aspect of any crypto trade or investment.
And in this article, we tried to cover as much as we can, so you can learn more about the technical aspects, but also to get to know some entertaining things about blockchain. We can say that it holds great potential for the further development of the traditional financial systems and economy.
Many people are still skeptical about it, but we are sure that one day, almost everyone will be able to hold some digital asset, so they can perform fast transactions with lower fees worldwide.