Welcome to this introduction on blockchain technology for beginners!
In this article, we look at the try to simply the concept. Once you can grasp the basic idea, your journey into blockchain will kick off. Enjoy!
WHAT IS BLOCKCHAIN TECHNOLOGY?
Do you know what a ledger is? Well then, you will grasp what a blockchain is faster because it is an “open, distributed ledger than can record transactions between two parties efficiently and in a verifiable and permanent way.”
The reason for the creation of blockchain technology is to make the modification or better still, falsification of data almost impossible. This is technology is great because it prevents malicious manipulation of data. Sorry, cheats!
The blockchain technology helps to transaction integrity intact because it stops the changing and copying or duplication of transactions.
Blockchain technology has made it possible to reduce the “cost of gatekeepers” – the financial institutions.
Before, you will need to pay every gatekeeper aka bank some commission before your financial transaction can scale through. Now, it is estimated that it saves transaction cost or bank commissions in the range $20 billion yearly.
It also makes it much easier to transact.
Now, you know Blockchain is like a database whose number one aim is to keep transaction history intact.
HERE ARE THE FEATURES OF BLOCKCHAIN TECHNOLOGY:
NO CENTRAL CONTROL
This decentralization of control means you can do financial transactions the way it was done when commerce was beginning, thousands of years ago – not like trade by barter but trading without the need for banks.
NEEDS A NETWORK OF COMPUTERS
Yup! For blockchain technology to work, it needs a network of computers, the more powerful the better.
IT BUILDS TRUST
Users trust in the algorithm of the blockchain because it guarantees a secure financial transaction even though the parties having business dealings are anonymous.
Nada. Zilch. No Monopoly. The absence of banks and financial institutions means there is no monopoly in the transfer of money between people.
QUICK THINGS TO CHIP IN
Blockchain is NOT Bitcoin. Bitcoin is the first of many cryptocurrencies and trust us there are many hundreds of cryptocurrencies. Here’s what Bitcoin is:
Bitcoin is an unregulated digital currency, designed to provide “trustless” transactions through an open ledger system. This means that transactions between individual parties don’t need all the massive trust systems we currently use (e.g., a bank, a check clearing house, a card processor) in order to be safe and valid. Instead, public publishing of the transactions and cryptography are used to ensure the legitimacy of the transactions. – JCastle
Wikipedia says there are over 1565 cryptocurrencies as at April 2018 and more are being created.
New cryptocurrencies are offered to the public via an initial coin offer.
ICOs mean Initial Coin Offer – this is a play on IPO – Initial Public Offer in the stock market. If you understand IPOs and how they work, then you shouldn’t have a problem understanding ICOs.
Currencies pay their own taxes using blockchains.
Check out this infographic from Block Geeks
NOW, LET’S IMAGINE BLOCKCHAIN TECHNOLOGY’S POSSIBILITIES …IMAGINE
- A social network with no monopoly, a news network with no monopoly, a cloud without servers…I can Imagine Nikola Tesla beaming with a wide grin in his grave.
- A world that is undergoing a fundamental shift because of the decentralization of control blockchain guarantees.
- A world of perfect trust especially in business transactions…a world without the crisis of legitimacy, a world with ZERO trust problems.
- A reinvented or radically revolutionized financial industry. Banks can adapt to this themselves or we will leave them no choice but to adopt to it anyway.
- The second generation of the internet – BLOCKCHAIN
- A publishing platform that lets people democratize information.
Before now, we depended on have 3rd parties or intermediaries aka banks to prevent duplication of money. Now with blockchain technology, we can have an established method that allows transactions without duplication.
Imagine doing transaction of almost any size in a few minutes which ordinarily will have taken days to complete.
Imagine much lower, variable transaction fees.
IMAGINE DIRECT PEER TO PEER (P2P) TRANSACTIONS WITHOUT THE FEAR OF BEING CHEATED!
This is the future blockchain technology is going to guarantee. We’re excited! You should be too.