Blockchain: What is it?

You hear it all the time, but what does it actually mean?

Simply put, blockchain is a distributed digital ledger that stores data of any kind. A blockchain can record information about cryptocurrency transactions and ownership of assets like Non Fungible Tokens (NFTs).

Any normal database can store this sort of information, what makes blockchain technology unique and exciting is that it is decentralised. This means that rather than the data being stored in one central location, like a data centre or an excel sheet, many copies of a blockchain database are held on multiple computers spread out across a network.

These individual computers are referred to as nodes.

With blockchain, the digital ledger is described as a “chain” made up of individual “blocks” of data. As fresh data is periodically added to the network, a new “block” is created and attached to the “chain.”

Adding new blocks to the chain is how the ledger is updated, hence the name 'blockchain'

This involves all nodes updating their version of the blockchain ledger to remain identical. This is why blockchain technology is considered so secure, as a majority of the nodes have to verify each new block added to the ledger. in cryptocurrencies for example; every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant's ledger. This transaction cannot be deleted or altered and is therefore called immutable.

crypto disrupts traditional business models by removing the need for trusted intermediaries

1. Cryptocurrency - this is the most common use of blockchain, and it is the core technology behind cryptocurrencies such as Bitcoin and Ethereum
2. Banking - Transactions using Fiat currencies are also being validated on the blockchain. This leads to a more efficient system of conventional payments.

3. Smart Contracts - A smart contract sets out the terms of an agreement. But unlike a traditional contract, a smart contract’s terms are executed as code running on a blockchain like Ethereum. These contracts let developers build apps (DApps) that take advantage of blockchain security, reliability, and accessibility while making the most of the advantages of blockchain technology.

4. NFT's & Asset Transfers - The blockchain can record the ownership and transfer of assets. This includes Non-fungible tokens (NFT's), but also includes real world assets like cars and real estate.

Summary

Blockchain is a bit of a buzzword at the moment, but the technology creates efficiency and transparency which is a powerful driver for innovation. We will explore the myriad advantages and new technologies being built on the blockchain, starting first with Bitcoin...