It’s easy to overlook the basics as you concern yourself with which crypto is shooting up the price charts. However, we are here to ensure you fully comprehend these basics, even as we serve you the latest news and trends. And of course, the most basic is, what is blockchain technology?
Blockchain technology refers to a distributed public ledger of transactions shared across a blockchain network. The information contained in a blockchain can take any form including money, assets, contracts, and agreements.
Each block is made up of 3 basic elements:
- The data – details about a transaction
- A nonce – This is a 32 bit whole number generated on the creation of a block and which is responsible for generating the block’s hash function.
- The hash – A 256-bit number that acts as the backbone of the network.
The power of the technology lies in the process involved in recording transactions. Unlike other systems like banks and credit card houses, blockchain does not have a central entity for maintenance and oversight. Instead, the digital ledger is managed by nodes.
A node is any electronic device that holds and maintains copies of the blockchain while keeping the network alive. Each node keeps its copy of the ledger and it is updated each time a block is added into the chain. Adding a block into a blockchain requires that miners solve a complex mathematical problem in a process known as “Proof of Work”.
Solving these problems is a tough task that requires high computational power. Adding a block to the blockchain requires a consensus from the majority of the nodes in a blockchain network.
Once a block qualifies to join a chain and an agreement is met between a majority of the nodes, the act is permanent. It cannot be altered, deleted or re-done. Transparency is a feature of the technology that makes every action visible by all the nodes on the network.
The Emergence of Cryptocurrencies
In 2008, a new invention hit the airwaves and changed how the world viewed blockchain. A mysterious Satoshi Nakamoto released a decentralized digital currency that has proved to be an alternative to fiat currency.
Bitcoin was the first successful implementation of blockchain technology. The success of bitcoin saw the emergence of other cryptocurrencies including Ethereum, Ripple, Litecoin, among others. There are currently over 5000 cryptocurrencies as registered on CoinMarketCap.
Applications of Blockchain
Medicine – Smart contracts make the management of patients’ records easy and convenient.
Supply chain management – With blockchain, a company can have end-to-end visibility of the supply chain with the help of IoT sensors that give information about products on transit i.e. location and condition.
Government – Democracy can be strengthened by using a decentralized system that prevents any form of fraud.
These are just but a few.
Blockchain technology has only been around for a few years, but the practical use cases are becoming mainstream. So disruptive is the technology that its impact is felt in every industry. With the top companies and governments adopting it, there is no doubt that this technology holds the future of equitable, fraud-free, and secure society.