In this article, we tell you all about blockchain. Whether you are a beginner or already knowledgeable about the subject, this article will answer all your questions.
What will we cover?
First, we start with the meaning and definition of blockchain technology. Then we tell a bit more about the history of this technology. We conclude with examples and case studies from the field.
What is it?
A blockchain is a decentralized collection of data, which is stored in order of when that data came in. The data cannot be altered or manipulated so it is seen as an objective dataset.
Although blockchain is often mentioned in the same breath as Bitcoin, they do not mean the same thing. Blockchain is neither an app nor a company. It is a new way of storing data on the Internet, in a secure and reliable manner. The technology can be used in conjunction with applications, payment providers, social networks, and much more. Therefore, there is no such thing as one blockchain, there are several. Many technical experts are already comparing Blockchain to the rise of the Internet.
As mentioned, a blockchain is a public ledger of information. This can be information about money transactions, agreements between parties, insurance contracts, or the energy consumption of a specific device.
In short; all transactions and information can be stored.
However, in order to store the information, “the network” must confirm this data. The network consists of several computers, also called nodes. Once the nodes within a network have reached an agreement (consensus) the information is added to the blockchain. This happens with every transaction. From that moment on, it cannot be modified or deleted unless the entire network reaches consensus again. The most common consensus system is called Proof-of-Work.
Because info on the blockchain can NOT be changed after the fact, it is very important that you take care to send money to the right address. If you send it to the wrong address it cannot be reversed.
Data is not stored on a central database, as is common practice. In this case, different copies of the data are stored in different places and computers (nodes). This is also called a peer-to-peer network (p2p). This ensures that if one point within the network is corrupted, the data is still kept safe.
The information stored on the Bitcoin blockchain contains all the details of transactions that have been made. This includes the amount of the transaction, the sender of the transaction (the sender's Bitcoin address), the recipient of the transaction and the exact time of the transaction.
Why the name?
The name comes from the way data is stored within the “chain. Namely, data is stored in blocks. These blocks are connected to each other creating a chain. In other words, a blockchain.
This structure is what makes the data so reliable. If you are evil and would like to change data, this can only be done by changing all blocks further down the chain as well. This is not possible to do without the network finding out.
Each new block contains data from transactions that have been made, for example. This includes a digital signature linked to the corresponding account from which the transaction was made.
A blockchain has 4 properties:
- All data, except private data, is public and accessible to everyone
- Information is stored decentrally, distributed among different computers
- All data is stored in conjunction with the corresponding time of that data
- The code is open-source, meaning that anyone can view it
The inventor of blockchain
It was in the year 2008 that blockchain technology was first discussed. The technology was described in a document about Bitcoin. This document, also called a white paper, was written by Satoshi Nakamoto. Satoshi Nakamoto is not a real name but an alias. To this day, no one knows for sure who the mysterious person (or group) behind the founding of Bitcoin is.
What we do know
In earlier papers by the same writer, this one claimed to be a man born in 1975 and residing, or having resided, in Japan. So at the time the document came out, and he invented the technology, this mysterious man was 33 years old. Because Satoshi invented Bitcoin, he was the first Bitcoin holder. We learned that data on the blockchain is transparent and public. So we can see how many BTC he holds. Currently, it is about 1 million in number.
Exactly who the mysterious inventor is is not very important. What matters is that this person had a vision. A vision of an economy with decentralized currency that did not require banks. This led to the Bitcoin. In this written piece, we'll take a closer look at what exactly bitcoin is and how it works.
2008 is now well behind us and there are now many more blockchains in the world than that of Bitcoin. Some projects are similar, others have expanded on the concept, creating a platform where much more is possible than just processing transactions. Example of such projects are NEO, IOTA, Cardano Lisk and Ethereum.
Because the cryptocurrency price has risen so much many people claim it is a bubble. And while the price increase may be a bubble, most people don't understand that the technology behind all these digital currencies is definitely not a bubble.
Blockchain is the internet of the future. It's going to revolutionize more than, say, email has or maybe even the Internet.
There are several industries and sectors where blockchain can add value. Many large multinationals have a department within the company that is working on ideas to make business processes better and more efficient.
From processing administrative data to processing payments. Various aspects of blockchain technology can be applied by banks and financial institutions.
Internet of Things / IoT
Blockchain will help secure and decentralize the “Internet of Things. Within the IoT, almost all electronic devices will be connected to the Internet and it is important that information is processed instantly.
Votes are currently still counted by hand. On the one hand, this is logical because regular computer servers can be hacked. When votes are stored decentrally, the results cannot be manipulated.
One of the most important elements of this new technology is the fact that no intermediary is needed anymore. Many “simple” contracts such as a will, for example, will no longer require a notary.
Blockchain is well suited for tracking medical progress, identification and securing patient records.
Whatever will happen in terms of value increases and decreases of cryptocurrency in the near future, the underlying technology is leading. There are currently thousands of very smart people working on the further development of blockchains and related applications. What is still a far cry from now, could be the daily reality tomorrow.
Bob Thompson is our inhouse Home and Garden, Energy and Gaming news writer. Bob is keenly aware of the need to recycle. Bob has written for many online publications over the course of his writing career, before joining our team.