The year is 2022, and we’re both in the future and the present. Unfortunately, there are no flying cars, but there have still been leaps and bounds in the technology sector—particularly in cryptocurrency.
It’s no secret that Blockchain is a topic that’s hot right now, but the majority of us probably wouldn’t be able to explain why the topic is exploding in every innovation and technology forum.
What Is Blockchain?
Blockchain is often explained using a lot of technical jargon by people in mathematics, cryptography, and network engineering. In most cases, blockchain is pretty straightforward and easy to understand.
An easy way to understand blockchain technology is to compare it to a Google Doc. When we share a document with a group of people, the document is distributed rather than copied or transferred. As a result, all parties have access to the document at the same time. There is no need to wait for changes from another party, and all changes to the document are recorded in real-time, ensuring complete transparency.
Of course, blockchain is more complicated than a Google Doc, but the analogy is apt because it illustrates how Blockchain works:
Blockchains are a form of databases, and more specifically, distributed databases. The main differences are in the type of data it stores the way it stores it, who is allowed access, and the fact that it cannot be manipulated or deleted.
It is a revolutionary technology that reduces risk, eliminates fraud, and brings transparency in a scalable way for a variety of uses.
What is NOT Blockchain?
You might hear about Blockchain concerning the following topics, but it’s important to understand that Blockchain is not a cryptocurrency, not cryptographic codification, not an IA or Machine Learning technology, and not a Python library or framework.
Blockchain’s Crypto Use
Cryptocurrencies are perhaps the most well-known use of blockchain (and the most controversial). You can use crypto just like a digital form of cash to pay for everything from your lunch to your next home. With crypto, transactions are always recorded and secured, because blockchain acts as a public ledger and an enhanced cryptographic security system.
How Does Blockchain Store Cryptocurrency?
A Bitcoin transaction is stored as a “block” rather than in arbitrary folders, as with a typical database. As new transactions occur, they are grouped into these “blocks.”
As each block fills up, it is chained onto the previous block and added to the long chain of transactions (hence “blockchain”). Using this method, the beginning of each block is followed by the last block where the last transaction is recorded, creating a chronological history of transactions. These blocks are stored on the blockchain in a format that allows us to view a detailed record of Bitcoin transactions.
Why the Hype Over Blockchain?
Many attempts have been made to create digital money in the past, but they have all failed—the biggest problem is trust. How do we know that someone creating a new currency won’t hoard it or keep your portion for themselves?
Bitcoin addresses this issue by using a type of database called a blockchain. Normal databases, such as an SQL database, have administrators who can change the entries (e.g., giving themselves a million dollars). Blockchain is different because nobody is in charge; it is run by those who use it. Plus, bitcoins can’t be hacked or double-spent, so people who own this money can trust that it has some value.
With the conversation over Blockchain technology heating up in recent years, you’ll want to keep up with all the information being put out there, so you can decide whether you want to invest in cryptocurrency and Blockchain technology.