What is Blockchain?
Blockchain began as a part of the cryptocurrency language. In the simplest terms, a block is a record of recent transactions. Once a block is completed, blocks enter the blockchain permanently. Also, once a block is completed, new blocks are immediately created. Blocks are connected chronologically, and each block contains a ‘cryptographic hash’ from the previous block, a time stamp and all transactional data. Therefore, a blockchain contains all transactional information from the first block, until the most recent one.
The most impressive part about blockchain is that blocks can never be deleted or copied. Each block is created through complicated cryptography to ensure its legitimacy. Blockchain can also be distributed. These databases are managed independently and designed in this way in order to eliminate the need for a third-party. Transactions are conducted through a peer-to-peer (P2P) network. Individuals who participate in transactions are those who validate the legitimacy of the other party when one person pays for something else.
Saying Goodbye to Third Parties
In almost all business transaction, we rely on third parties: banks, governments, schools, lawyers, and more, to keep legitimate and official records about all transactions we make. Transactions do not just include financial. Transactions can be certifications, assets, digital rights, intellectual property and these days, even votes. In today’s climate, individuals have lost massive amounts of trust for third parties. With bank scandals, low government ratings, financial crises, and more, it is understandable that people are looking for a new appealing alternative.
This is where blockchain comes in. Blockchain does not rely on any individual or organization. The only thing to rely on is the blockchain system. This innovative system holds the power to change the world. At large, blockchain could help the population re-gain trust in companies, and in one another. It has the potential to reduce economical friction and create new ways of conducting business.
Out of the blockchain technology came Ethereum, a complex blockchain program. If you’ve ever hear of Ethereum, you’ve probably heard of their revolutionary ‘smart contracts.’ In short, more complex blockchain technology has the capability of processing commercial transactions. Usually smart contracts are thought of as ‘self-executing legal contracts’, in other words, real contracts in digital form. Smart contracts are their own small program hardware stored inside of blockchain so again, no individual or third-party is in charge of the money. Blockchain holds funds until a certain goal is reached or obtained, and only then are the funds released. Smart contracts add a whole new level to the capabilities of blockchain technology.
Where is Blockchain Headed?
There are endless possibilities for blockchain technology. Commonly, we see blockchain connected with cryptocurrency and financial industries, but what does this really mean for our world? Blockchain can provide a payment infrastructure to send money around the world and pay merchants with cryptocurrency. Blockchain can also be used to create digital assets such as stocks, bonds, and even frequent flyer miles.
Due to its strong security properties, blockchain can be used as a recording ledger for any company’s transaction history. Analysts are also seeing blockchain as a secure service to conduct voting. There is no tampering and it would ensure the fairness of any organizational or governmental election.
We must remember that the blockchain technology is still very new. It could be a long period of time until we see blockchain in its prime. Blockchain offers the world a wide range of opportunities in the future and its impact could be massive. It has the ability to completely revamp our entire economy by improving efficiency and safety in transactions and storing sensitive information.