What is the blockchain? Anyone who has spent a bit of time on cryptocurrencies like Bitcoin will inevitably come across Blockchain. But what exactly is that? How does this work? And most of all, why do they all say Blockchain is so damn important? We explain the underlying concept to overwhelm without entry into the matter.
On the Internet, there are many explanations to Blockchain and you can Learn Blockchain right here. Many are written with a strong technical background and are aimed primarily at people who have programming skills or are at home in the IT world. Crypto-beginners are therefore often faced with the problem that complex technical terms are explained with other technical terms and you quickly from the one-hundredth of the millennium. The concept of Blockchain is not that difficult to understand.
To get started, the short version, before we go a little deeper into the matter: A blockchain is a database that is publicly accessible to all participants and at the same time forgery-proof. So you can think of Blockchain as a large Excel file, but with the difference that only new entries are added and no old ones are deleted.
What Is The Blockchain? Easily Explained
As you’ve probably noticed, the word blockchain is simple; it means blockchain, meaning a series of data blocks, which are stored in a chain, ie one behind the other.
The blockchain is therefore primarily a large database in which all sorts of information can be stored. At the very beginning of a blockchain system is a block of origin, all other information is then chronologically hung behind it after they have been checked and confirmed. One application of Blockchain is the crypto-currency Bitcoin.
What Is Stored In The Blockchain?
The blockchain is often referred to as Bitcoin and other cryptocurrencies. The two things are not the same. Rather, the blockchain is the technical foundation that enables currencies like Bitcoin in the first place. In the case of Bitcoin, all of the participants’ transactions are stored in the blockchain, much like a large cash book.
However, not only financial transactions can be stored in the blockchain. The concept is suitable in principle for all sorts of information, such as contracts, accounting or for the management of digital goods such as photos, music or texts. This is made possible by two central properties of the blockchain:
- The database is publicly available for the participants.
- The database is forgery-proof.
How Does The Blockchain Work?
Unlike traditional databases, the blockchain is not just on a server. Instead, it is a distributed database. This means that each participant in the blockchain system has a complete copy of the database on their computer. The Bitcoin Blockchain illustrates this quite well: since the introduction in 2009, the system grew steadily, now (as of January 2018), the size is just under 145 GB. These are all transactions ever made, as old entries cannot be deleted. The trick: you can see that a transaction has been made, but not by whom. The system is thus pseudo-anonymous.
The second property of Blockchain makes it so interesting for transactions where security matters. The blockchain is tamper-proof since each new data block is connected to the previous one and the history is stored in the form of a checksum. In addition, each block contains the checksum for the entire chain of all previous blocks. The order of the transactions is therefore fixed and can not be changed later.
What’s Up With Mining?
The data in the blockchain is also stored in encrypted form. This brings us to the topic of Mining: Each time a new block is generated by transactions, its authenticity must be confirmed. This is done by other participants, the so-called miners, taking the information from this block, applying a mathematical formula and transforming the information into a series of numbers and letters. This hash sum is then stored in the block at the end of the blockchain.
Importance Of Blockchain Technology In 2018
The Blockchain technology will be introduced into the business world in 2018 with numerous applications. In particular, Blockchain based procedural podiums support business applications in which intermediaries trust as well as transact businesses. New podiums solve present performance and also scalability problems. This enables them to take on more and more tasks in everyday business life.
This benefits, for example, the rapid development of the Internet of Things (IoT). Managing exponential growth in the smart city, smart home, as well as the industrial Internet of Things data, cause major problems for businesses and even public establishments. Using blockchain technology, this data can be managed efficiently and securely and used as an important raw material in our digitized world.
New Applications Thanks To Streamlined Validation Options
This development is fueled by new platforms that rely on validation capabilities that are less energy and cost intensive than the proof of work process, which uses, for example, the crypto-currency Bitcoin. New great consensus algorithms confirm dealings or perhaps transactions a lot faster and even more energy proficient while being very tricky to maneuver. The Platforms, for instance, IOTA or maybe Hyperledger Fabric provides the necessary trust in the network without a central authority.
Above all, companies are driving the technological advancements to benefit from blockchain technology as soon as possible. While 2017 was the year of the Blockchain proof of concepts, which proved the feasibility of blockchain projects in principle, we will see increased blockchain in 2018.
Private And Public Blockchains Complement Each Other
In particular, private blockchains, with a limited network of selected users, will operate in 2018. The huge public blockchains akin to Bitcoin or perhaps Ethereum will time and again serve to be a backstop for all these great private blockchains to preserve their very own honesty. And again, both methods will survive in cooperation sides by side as well as interwoven in the future out there.
Lastly, In addition to the growing Ethereum, which a lot of professionals refer to being the Blockchain 2.0, the well known Hyperledger Fabric has already got the awesome breakthrough: these platforms offer the basis for a lot of proofs of concept. For instance, the ideas of smart contracts integrated into Etereum aids automate straightforward procedures with the blockchain. The platform thus creates the basis for distributed apps (Dapps), ie distributed applications in the network.