With the rise of cryptocurrency in recent years, an ever-increasing number of aspiring investors are looking to get into the digital currency game, find the next big thing on the market, and establish long-term success and affluence. But before such an impressive dream can even begin to take form, there is a need to go back to the basics, and understand the notion and technology this new trend was built upon.
You need to understand blockchain. Now, don’t fool yourself, this in itself can be a cumbersome task, and you may want to give your brain enough time to process everything you’re about to read. Maybe even come back for a re-read the following day. That said, here is your essential guide to understanding blockchain technology.
An ingenious, yet confusing invention
Before we delve into the numerous, seemingly endless possibilities of blockchain, let’s first take a look at what it is and how it came to be. Created in 2008 as the driver of the world’s most famous cryptocurrency, Bitcoin, blockchain has now evolved into something far greater, perhaps even a new version of the internet.
With that in mind, it doesn’t come as a surprise that blockchain was originally founded to act as a decentralized public ledger, enabling the ungoverned yet protected freedom of economic transaction, aiming to deconstruct the traditional banking system. But blockchain doesn’t just record financial transactions (which is still its main use today) but virtually everything of value.
Simply put, we are talking about a decentralized network that stores value in many forms in a chain, or rather, it builds new blocks onto the network every time a transaction is completed. These additions are permanent and unalterable, creating a new block of data for the ledger once combined with other transactions.
An ever-growing, encrypted database
Want a term you’re more familiar with? Blockchain is a digital database. If you imagine a network that continuously grows and builds upon itself with information (a publicly-built internet, perhaps), then you would get a basic understanding of blockchain technology. This information pool lives on the blockchain, and given the fact that this is a decentralized network, every record can be easily verified and protected.
This creates the opportunity to find and invest in the next big cryptocurrency using blockchain. For instance, reputable sources such as The Blockchain Review provide deep insights into the latest trends in the industry, including cryptocurrencies and their performance on the market. Given the fact that the cryptocurrency market is a highly volatile one, there is a need to research and discover currencies on the rise before others do in order to make a life-changing investment.
Transparency, durability, security
All of the above brings us to the next crucial point – blockchain cannot be corrupted. Not only is this an ever-expanding database that is hosted by millions of computers simultaneously, effectively allowing anyone with a Wi-Fi connection to access it, but given the fact that there is no centralized version of the information, there is no way it can be corrupted.
This builds a solid foundation and a transparent network that will truly stand the test of time, and even become the highly anticipated Web 3.0. Why, you ask? Because the identical blocks of information disallow any single entity (like a bank) to take control of the network, and because there is no way for the entire chain to be compromised, there is no single point of failure.
This also means that, should anyone be so ambitious or insane to try such a feat, it would take immense computing power to override the entire network. Given the fact that blockchain is something like a self-auditing database of digital information, the network reconciles every transaction that happens in ten-minute intervals, making it transparent and incorruptible.
Blockchain – the internet of the future
So what are the uses of blockchain technology other than trading and supporting cryptocurrencies? Succinctly, you can use blockchain for everything and anything. From creating smart contracts that will execute when certain conditions have been met – Ethereum was built for this purpose – through creating crowd-sourced venture capital funds, all the way to the protection of intellectual property and much, much more.
In essence, blockchain has the opportunity to become the new internet, one that is made by the people, for the people, unshackled by government oversight, unable to be taxed, sold, or used as a commodity, thus allowing the free flow of information across the globe. It seems that a new age of creating and sharing digital information has begun.
Blockchain started out as a platform that would support the development and eventual superstardom of Bitcoin, yet innovators and forward-thinking business leaders were quick to realize that this technology could be used to transform the modern world. As a decentralized, continuously expanding network, blockchain can serve a multitude of purposes, of which mining and trading cryptocurrencies remains its primary function.
By David Webb