Most people think that bitcoin and blockchain are synonymous. It’s not the same thing. Blockchain is the technology behind bitcoin.
Blockchain is a network of databases called “blocks” that contains either monetary value and / or information. These blocks have three key features:
- Data – Data represents the information about the transaction recorded.
- Hash – Hash is a digital fingerprint assigned to each block through the cryptography.
- Hash of the previous block – The chain is produced through recording the previous block’s hash and thus enables verification of past transactions.
Since each block contains information of the previous block, it makes it very hard to tamper the whole chain and to do that you have to change ALL of the previous blocks. And to make it even more secure, each blockchain are recorded in nodes which are decentralized ledgers that represent copies of the database and anyone in the world can have a copy of it.
This provides a system of validation called “consensus” that ensures that each copy of the blockchain is exact copy of the original, or I should say all are original copies. This happens through a methodology called “block time” which means it is the amount of time needed to verify all of the previous blocks validity.
If you would try to hack the system, you must be prepared to hack billions of nodes or devices all over the world. This makes this technology very important to almost all industries and people all over the world.
- It can eliminate the need of middleman entities in transfer of money all over the world and lower costs for transferring money (actually bitcoin has achieved this already, but global adoption is yet to be seen).
- It will eliminate the need of information verification entities like External auditors, Accountants, Insurance providers, etc.
- Explorio spearheaded by Jakob Laukaitis is using blockchain to make travel recommendations and content beneficial and awards tokens that you can exchange for perks or discounts while traveling.
It may take sometime to adoption but as technology is expected to skyrocket its growth in the next four years, expect blockchain as a disruptive force that will shape the world in different ways that we never thought possible.
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