Technology has continued to advance in the world today as different solutions are being provided in the digital space.
Crypto as they said should be dead years ago, but the fellow is still basking stronger as we keep going. The interesting thing about cryptocurrencies is that they are built on Blockchains. So the question is, What is Blockchain?
Is it a chain made up of blocks or what?
Let’s move on!
History of Blockchain
This brief history will help us understand the subject matter the more.
Everyone believes that the first blockchain technology was created by Satoshi Nakamoto in 2008.
This was when group of people or a person named Nakamoto aired out a paper called Bitcoin.
This Bitcoin is the First crypto being created on a blockchain as a substitute for peer to peer Electronic Cash System and for store of value purposes.
Since then the Word Blockchain took the world by surprised storming up from the world’s first cryptocurrency Bitcoin.
What is Blockchain
Now a Blockchain is a secured digital ledger where all crypto transactions are recorded.
Any transaction done on the crypto space is recorded securely on the blockchain.
This chain has distributed database and it is shared among the nodes of a computer network.
Calling it a data suggests that it stores information electronically in digital way(Technology).
The reason behind blockchain is to create a secured network for maintaining a unique and decentralized records of transactions. It records and can never edit a recorded data. That is the innovation with a blockchain and thus it yields fidelity and security of a record of data even without a third party (DECENTRALIZED).
Blockchain in Lay Man understanding
If the explanation didn’t pay off well, lets take an example that will bring down the meaning to even a 3 year old child.
See yourself as a business man offering contributions for a group of people. As the center man you should have a record where you input the contributed amounts of money given by each people.
In the recording process any transaction is always recorded by you and the concerned person. Incase Mr A asks for some amount of money, you give him and you both take record of the money and the remaining. So that book in which the transactions are recorded is called the Blockchain. And the sets of Information being recorded in groups is called a Block.
Blockchain and Blocks
Am sure you are still wondering why there is block in the chain.
To understand Block, we need to compare a normal database to a Blockchain database.
A normal data collects information singlehandedly while a blockchain collects information in groups, and this so called group is referred to as blocks which carries grouped information. The storage of a particular block can be filled up because blocks have different set of capacities. So when a block is filled, it is closed and then linked to the previously filled block. And that link or chain of filled block is what we call the Blockchain. Any new transaction after a filled block will be automatically added to a fresh block iwhich in turn when filled will be also linked to other filled chain once filled.
The reason for data being arranged in blocks is to prevent editing or hacking, that is why the structure of a blockchain makes it decentralized and difficult to be altered. So when a code is executed it is difficult to reverse or altered.
Blockchain and cryptocurrency
Since cryptocurrency is one of the core products of blockchain technology, it will be necessary to understand how they work together.
Blockchain technology offers transparency, authenticity, opportunity to any business or firm in the world at large. Now lets explain how it works in the crypto space.
- Transparency: Blockchain technology makes cryptocurrency transparent by bringing the transaction made in crypto the world accessible by everyone. All crypto transactions can be checked and verified through the blockchain. You don’t need to go to the bank to confirm your bank statement. All you need is your phone and an internet connection. The blockchain was made through and open source technology, so anybody can participate in it.
- Verification: Unlike our fiat curremcies, when our money can be reversed and keep us in worry till we finally see the bank or a reverse. Cryptocurrencies are different as any transaction executed will see no reverse. Even if you were lied to that they sent you some coins, you just need to ask for the transaction hash tag, to confirm or verify it yourself. All you need is to paste the hash tag in the blockchain network, and see if it’s successful or pending. The less scalability of tokens can make transactions to pend but it can never reverse a sent transaction.
- Security: Your cryptocurrencies are safe through blockchain technology. Hacking or tampering with the blockchain is almost impossible to achieve. Bitcoin, the world’s first cryptocurrency, is impossible to hack, as it is open source and works with the proof of work blockchain concensus protocol.
Conclusion
The importance of blockchain is not limited to cryptocurrency alone, as it can be utilized in every area of life or business. A real estate firm can also utilize blockchain technology to authenticate ownership.
Blockchain was created with a goal, which is to allow digital transactions to be securely recorded, not altered or edited. This information can also be distributed without being edited. The blockchain technology however becomes the basis for immutable digital transactions.
Finally, blockchain technology will give birth to many digital innovations. After the rise of web1, web2, and now the Web3. It is important to note than web3 will be built on blockchain, to offer decentralization and data preservation.
Blockchain technology has done positive things in the world at large, and it has paved the way for cryptocurrencies, non fungible tokens, metaverse, and the now WEB 3.O.