If you’ve attempted to dive into this mysterious thing called blockchain, you’d be forgiven for recoiling in horror at the sheer opaqueness of the technology that is often used to frame it. So, before we get into what a cryptocurrency is and how blockchain technology might change the world, let’s discuss what blockchain is.
What Blockchain Actually Is?
The blockchain is an undeniably ingenious invention – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. But since then, it has evolved into something higher, and the main question every single person is asking is: What is Blockchain?
By allowing digital information to be distributed but not copied, blockchain technology created the backbone of a new type of internet. Initially devised for the digital currency, Bitcoin, the tech community is now finding other potential uses for the technology.
Bitcoin has been called “digital gold,” and for a good reason. To date, the total value of the currency is close to $9 Bn. And Blockchains can make other types of digital value. Like the internet (or your car), you don’t need to know how the blockchain works to use it. However, having a basic knowledge of this new technology shows why it’s considered revolutionary.
In the simplest terms, a blockchain is a digital ledger of transactions, not unlike the ledgers we have been using for hundreds of years to record sales and purchases. The function of this digital ledger is, in fact, pretty much identical to a traditional ledger in that it records debits and credits between people.
“Bitcoin the currency, I think, is going to go nowhere … the blockchain is a technology which we’ve been studying, and yes it’s real.” —Jamie Dimon on CNBC.
Traditional Database Services
With conventional transactions, a payment from one person to another involves some kind of intermediary to facilitate the transaction. Let’s say Rob wants to transfer $20 to John. He can either give him cash in the form of a $20 note, or he can use some banking app to transfer the money directly to his bank account. In both cases, a bank is an intermediary verifying the transaction: Rob’s funds are confirmed when he takes the money out of a cash machine, or they are verified by the app when he makes the digital transfer. The bank decides if the transaction should go ahead. The bank also holds the record of all transactions made by Rob and is solely responsible for updating it whenever Rob pays someone or receives money into his account. In other words, the bank holds and controls the ledger, and everything flows through the bank.