What is Blockchain?
Blockchain technology is essentially a programmable ledger system. You've probably heard of electronic ledgers that keep track of financial transactions - things like credit card transactions or bank accounts. Blockchain technology differs from those systems in that it has many other uses besides making transactions between parties easier.
Blockchain was first introduced to the world in 2008 by Satoshi Nakamoto in his whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System". While some might be wary of this new technology, there is no doubt it will be an integral part of everyday life in years to come.
In the case of blockchain technology, the ledger is a network of computers around the world. Each computer on the network keeps a copy of it and updates it. Personal transactions are stored across thousands of computers in a decentralized way; no one person or government controls it. It's this decentralization that makes blockchain so innovative because no central authority has control over it. incredibly exciting new method of transferring money or information without going through a bank or any other third party.
The blockchain
system was invented for bitcoin and uses the same building blocks allowing for the peer-to-peer exchange of value without central authority. There has been much debate as to whether or not this is truly decentralized technology or simply a new type of database that could be altered by any entity with access to it. What most everyone can agree on is that the blockchain is a new way to store and transfer information. Blockchain technology can be used by many industries and has significant potential for improved security and resiliency.
Blockchain is a permanent record of transactions that goes beyond just proving who owned what at a given point in time. It can also be used to track payments, so that everyone involved in the chain knows exactly how the money will move. Blockchain makes it possible for anyone to verify that the transfer of money happened as expected.
Of course, this is the part of blockchain where things get really interesting. Imagine using blockchain to release new music!
**How is the ledger updated? **
A group of users, called miners, are working on the blockchain to verify and record transactions through a process called cryptography. They will run complex mathematical problems and either verify them or deny them based on a set of conditions and rules.
The blockchain is a distributed ledger
it relies on multiple computers all over the world to maintain the integrity of its transactions. This means that there is not a single point of failure. Blocks of code called 'blocks' are locked, or encrypted, with a private key known only to the owner of that block. Each block will include information such as the total balances for all users who have inserted money into and withdrawn money from that particular wallet. With this type of system it would be virtually impossible for someone to steal and hold onto funds.
To use the blockchain, users open software wallets (Bitcoin Core) and follow the instructions on how to record a transaction. In order a transaction to be successful it must be verified by at least 51% of the network. Once transactions are verified and written into a block they are added to the chronological ledger, which is then added to all copies of the blockchain that are distributed around the world. This feature means that there is no going back and changing or erasing any transactions. This makes blockchains really secure.
Blockchain benefits can be divided into two main categories:
1) Improved efficiency and transparency of transactions
Rather than have each transaction verified by multiple parties, blockchain provides a secure way to create immutable records that each party can track. This is the "in-between" step in a payment established through online shopping sites like Amazon or eBay. Before a transaction can occur, the buyer's bank must verify that the funds are available. Once verified, Amazon sends a message to the seller, who then ships the goods to the buyer. The blockchain provides a single ledger of transactions and balances rather than having multiple ledgers maintained separately by each party. It also enables faster transaction settlement and better cash flow because it is no longer necessary to wait for several days or weeks for a payment to clear.
2) Reduced cost of transactions
In addition to enabling faster payment settlement, blockchain technology reduces the costs associated with conducting a transaction. Business spending on information technology has grown by an average of 4.5% per year over the last 10 years. Blockchain technology has the potential to reduce business information-technology spending by as much as $20 billion per year through digitizing global supply chains, distributed storage without redundancy, and smart contracts that can execute payments without third-party involvement
