Guide for Beginners: Blockchain Technology as you should know
Blockchain technology is the next big thing in data storage and sharing since the internet. Though currently it is mainly being used by the cryptocurrency company Bitcoin, many have seen its potential and applications across many fields.
Its main function involves storing the transaction data on a public ledger which is available for everyone on the network. It sounds simple and not all that exciting, but there is so much more going on behind the silver screen.
Though it may not affect you now, many have called Blockchain technology, the future of technology. Somewhere along the line there will come a time for you to choose your services and products between whether they come with or without blockchain and a basic knowledge as to what this mysterious force is will be handy for you.
Bitcoin.org first came into existence in 2009 with the blockchain technology. Its creator, who is a mysterious entity known as Satoshi Nakamoto, released it as open source software. Bitcoin was software developed to carry out payment for services. It may not seem like much but they still became quite famous. This was because of the peer-to-peer transfer system, which excluded any middleman from the equation and for being a decentralized digital currency. The last part was thanks to the blockchain technology.
Today it has been estimated that close to 200,000 USD worth transactions take place on bitcoin every day.
Blockchain: What is it?
The blockchain is a system in which information is not centralized but present as a shared and continually updated database. All the systems involved in a blockchain network, called nodes, store the information. This method of storing information is beneficial because this way it is available to the public and verifiable by all.
The best way to explain this is to imagine a Google spreadsheet which is available to all the computers in a network and also are regularly updated.
Just like the internet hasn’t failed us since its invention, blockchain has the same work ethic. Since its data storage is a network and not centralized it has two main advantages.
In the digital age, our main concern is the loss of control of our information to a malicious entity, which is being hacked. Blockchain technology negates this threat by the simple method of not being centralized. Since the information is spread to a network of nodes, there is no central point of attack. Many have theorized that it can be done, but physically will not yield any results.
Since the information is available on many systems at once there is no single administrator, it is open to all for verification which must have come handy for a money transfer site like bitcoin. The transaction could be checked and verified whenever necessary by any member of the party.
The blockchain network is in a loop of checking, correcting and updating itself in intervals of 10 minutes. The information is reconciled and updated so that the transactions that take place are updated all throughout the network. This gives an air of transparency to the whole system.
The main idea behind blockchain was decentralization. Rather than giving administration power to one entity, every one in use of the network becomes an administrator. This could be seen in Bitcoin, where the entire network is responsible is managing the system rather than one authority.
Today the problem with internet services is ‘username/password’ system of security and that it is all kept in one vulnerable central spot.
Blockchain eliminates this threat by bang decentralized and spread over a network, but also uses sophisticated encryption technology. The basis of this encryption could be called public and private keys. A public key is a long randomly generated string of numerals, which as the name suggests, is your user identity or address. The private key is more like a password, giving you access to the user account to monitor your bitcoin assets. This password could be the only point of failure in this well-developed system, so make sure to keep it discreet.
What the future holds
In creating bitcoin, Satoshi Nakamoto also created a system of information sharing which has many applications in many fields on the interweb.
The Blockchain technology could be fused with a coded smart contract. The function of this system will be to execute the contract when specified conditions are met. Ethereum is an open source blockchain project which has already realized this possibility.
Companies like Uber and Ola provide you services and the payment for these goes through a third party, the company, before reaching the driver. Blockchain will give us the capability to transfer funds directly the concerned party without an interfering middleman.
Voting systems came under scrutiny recently during the 2016 US elections when Russian hackers were accused of steering the elections in the direction they wanted. If a decentralized system of a network like a blockchain is used, such attacks will never threaten governance.
Blockchain technology is going to change the way we use the ether known as the internet. It would become safer and more accessible than it is now where the administrative power will belong to the people.