What is Blockchain? Many people have heard this question, but very few can actually answer it. What is it? How does it work, and why should I care? Those are all fantastic questions deserving of an equally fantastic answer. Simply put, it’s a mutual, distributed ledger technology. But don’t worry; we won’t leave it at that. It’s time to dive deeper into the details of this revolutionary tech and put an end to the questions once and for all.
So, what is Blockchain? Forget everything you might have heard about this technology; let’s just start with the basics. A blockchain is a system of distributed ledgers that records and stores transactions. It's a sort of a database. However, instead of storing just one version of the database on one server or computer, everyone involved in the chain has their own copy of the database. Every single transaction is stored in the chain in chronological order and it’s impossible to edit them. Furthermore, all this information is publicly available for eternity. You might be familiar with this technology in the form of Bitcoin, currently the world’s most popular cryptocurrency. However, the technology has a wide array of uses besides digital currency. So, now that we know what it is, how exactly does it work?
This technology gets its name because it consists of a series of blocks. Every time a transaction is completed, a new block gets added to the chain. Hence, “Blockchain” is born. When a user logs on to the network, they get an updated version of the ledger. This chain of blocks then serves as “proof-of-work” for all the completed transactions. Each block has a timestamp, complete with a link to the previous block. This sets up the two main roles of the technology: transferring value and establishing trust/identity.
So why does all this matter to you? Well, what has everyone so excited about this technology is the possibility of eliminating the central authority. This technology records the transactions and establishes identity, security, and contracts all on its own. Traditionally, this was done by financial services, but now, they are facing extinction. You can see why this type of disruption is turning heads now.