The term ‘Blockchain’ is actually, a combination of two words – Block (i.e. list of digital records), and Chain (which is cryptographic links connected together).
In other words, blockchain is list of digital blocks that are chained together using cryptographic nodes, right?
I guess you are still very confused as it is right now, but this post will help you in understanding blockchain and how it works. You will also see its connection with cryptocurrencies.
In financial industry, unlike the blockchain development today, there are lots of middlemen (e.g. payment processors, banks, and credit cards companies etc).
Intermediaries like these, are institutions that help to establish trust between crypto traders like; buyers and sellers, where-by ensuring accurate transactions.
These are the major reason why cost of transactions tends to be costly or cheap depending on speed.
So let’s enter the cryptocurrency basics to learn blockchain already!
What is Blockchain technology?
Blockchain simply eliminates the need for middlemen by providing a decentralized, trust-less ledger system with little, or no exposure to fraudulent activities.
This also helps in making transactions faster by simply removing financial institution protocols. That’s to say, blockchain transactions occurs without the financial institutions getting involved directly, or indirectly.
It can be known to be called more like a peer-to-peer transactions, without any kind of third-party.
Althoug, blockchain explained, it’s commonly used in connection with bitcoin transactions to state the progress of transfers made. And it is also used by some companies to disrupt huge data, supply of chain to gamblers and the internet.
How does it work?
Now you may be thinking there’s something like a blockchain app – but NO! Blockchain is not an app, but it’s like group of networked nodes connected together. And it has its own paths of links for specific transactions.
These are large network of computers that runs the blockchain. They validate and keep records of all transactions by solving complex mathematical algorithms.
Now, each of the nodes has a complete history of all transactions, which means, no one can change any data without letting the whole systems know (or they will definitely reject the change instantly).
How secured is Blockchain?
If a hacker started changing records in one ledger, all the other nodes would reject it since the new records would not match the data stored by everyone else.
There’s no centralized authority that can manipulate a Blockchain.
The only way to manipulate data is for every single node to conspire together, which is unlikely. In the case of Bitcoin, there are roughly 10,000 different Bitcoin nodes spread across the world.
Some blockchains are susceptible to 51 percent attacks, whereby a group of attackers controls more than half of a blockchain’s computing power.
For large networks, like Bitcoin’s blockchain, that’s very unlikely happen. But it remains a threat for smaller blockchains with fewer miners.
Benefits of blockchain development
1. Fast Transactions: It is very fast because already it has cut out the middlemen that tends to delay most financial transactions, and validation are even inbuilt into the systems.
2. Cost effective: Blockchain is very cheap compared to what middlemen charge to move finance between financial institutions.
3. Privacy: It is secured to the extent that transaction details only remains within the nodes in the networked systems and cannot be seen by humans.
Crypto hacking and theft
Your public key isn’t sensitive, but the private key is. Only the genuine account holder should have access to the private key.
If anyone gets hold of it, your account could get emptied, and to keep your coins safe, you should look into the best cryptocurrency cold wallets.
Blockchain in real world
While many blockchains only store transaction details, blockchain technology is playing an ever more prominent role in the world around us in ways that have nothing to do with finance and payments.
It’s possible to store all kinds of data on a blockchain: medical records, secure messages, smart contracts, and more. That’s why some of the top cryptocurrencies in the world came into existence.
Some of the more curious use cases for blockchains include protecting endangered species, fighting fine art forgery, and enforcing food safety standards.
Even Facebook’s seemingly doomed Libra project relies on a blockchain.
One of the most compelling use cases is for issuing smart contracts on the blockchain.
A smart contract is a piece of code that lives on the blockchain and can enforce (rather than merely outline) the terms of a particular agreement.
Smart contracts could be used in house purchases, elections, and even identity management and protection.
The most commonly used blockchain for smart contracts is Ethereum.
Smart contracts and the protection of endangered species are all well-and-good. But are there any ways you can use a blockchain in your day-to-day life?
Well, yes. For example, you can now stream music on the blockchain using services like Audius and BitSong. Or you can sign up for blockchain-based Twitter alternatives such as Mastodon and Peepeth.
People who spend a lot of time online should check out the Brave browser and the BAT token (it pays you for browsing sites with ads).
And what about Reddit alternatives on the blockchain?
You can use them to earn crypto in exchange for your high-quality content. Some people manage to make several hundred dollars per month. The most popular Reddit alternative on a blockchain is Steemit.
You can even find blockchain-based Wikipedia alternatives and decentralized instant messaging apps.
If you’re a real blockchain aficionado, you could go out and buy a blockchain smartphone or play games on the blockchain, and there’s even talk about a new “decentralized internet.” Watch this space.