Blockchain… What is that?
Want to learn about Blockchain? What are you waiting for!
Blockchain is a popular topic nowadays, yet many people do not know what Blockchain is. In this article, I will break down what Blockchain is, how it is secure, and how it is the future of technology.
What is the Blockchain?
In similar terms, a blockchain is a chain of blocks that hold information. This information is available to the public, yet at the same time, it cannot be changed by the public. The Blockchain acts like distributed ledger on transactions made on the Blockchain. This idea on a blockchain was adapted by Satoshi Nakamoto in 2009 to create the popular cryptocurrency, Bitcoin.
What is a block?
Now we know what the Blockchain is, but what does each block in the Blockchain do? Each block contains data and two hashes. The data is details about a crypto transaction. The hashes are unique digital identifiers of specific blocks. One hash is assigned to the current block, and the other is assigned to the previous block, creating a “chain” from one block to the next.
What makes it secure?
What makes the Blockchain one of the most secure networks on the internet is that it is a Peer-to-Peer Network and a “protocol” called Proof of work.
A Peer-to-Peer network (p2p) is a network that shares the workload of tasks among peers (or devices on the network). This makes the Blockchain not controlled by a particular organization but controlled by everyone on the Blockchain. This is what we call decentralization. Because of this, the entire network has a constantly updated copy of the blockchain history, and if there are any outside changes, the peers (also called nodes) can verify whether or not the change is valid. This is an elusive p2p protocol called consensus protocol.
Another protocol that makes the Blockchain secure is the proof of work protocol. This protocol required all blocks to show “work” on how the block was created. This protocol is secure because to change one block, you have to change all of the following blocks for the first change to be valid. This is nearly impossible to do because of the consensus protocol.
What is it used for?
Blockchain technology is not just used for cryptocurrency, but it is used to secure records, create digital notaries, and even collect funds. In addition, the Blockchain is used to create Smart Contracts for crypto and other areas of finance and technology.
What are Smart Contracts?
The term “Smart Contracts’’ was first used by Nick Szabo, a Computer scientist, in 1997. He had a vision to use Smart Contracts as digital terms and agreements without any third parties. Today, Smart Contracts are programs stored on the Blockchain that can be used to exchange cryptocurrency, tokens, and coins based on specific terms, like an actual contract.
What will Blockchain become?
Cryptocurrencies like Bitcoin and Ethereum are designing their blockchains to be versatile and ultimately create something more significant than even crypto. Blockchain technology like Web3 and Smart Contracts will be the new wave of innovation.
Sources
Simply Explained. How Does a Blockchain Work — Simply Explained. YouTube, 13 Nov. 2017, https://www.youtube.com/watch?v=SSo_EIwHSd4.
— . Smart Contracts — Simply Explained. YouTube, 20 Nov. 2017, https://www.youtube.com/watch?v=ZE2HxTmxfrI.
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