Since 2009, when Bitcoin and blockchain technology was founded, humanity has been introduced to digital currencies’ exciting world. While there have been previous efforts to create online coins pre-Bitcoin years, Bitcoin is recognized as the first successful and well-known cryptocurrency. It paved the way for other digital currencies.
Blockchain technology and cryptocurrencies are indubitably one of the ingenious inventions of mankind. It has evolved into something bigger, and so the question stands, what exactly is blockchain—the technology behind the bitcoin network—and how does it work?
What Is Blockchain?
In simple terms, blockchain is a time-stamped digital ledger managed by multiple interconnected computers, also called “nodes,” that isn’t owned by a single entity. Blockchain technology consists of “blocks” that record relevant information about transactions, including the time, amount, and addresses involved in them.
Blockchain uses algorithms to link data sets, verify each one, and create a timestamped hash code of the data. For every transaction, the blockchain copies are distributed to the users within the network to view and access the recorded data.
With blockchain, users of Bitcoin and other digital currencies that use the technology retain privacy and security while having a shared, decentralized ledger. Moreover, there’s no intermediary or central authority involved, minimizing transaction costs.
You must understand that blockchain and Bitcoin are not the same things. Blockchain is the technology that Bitcoin and other cryptocurrencies use to store, manage, and secure transactions.
Applications of Blockchain
Blockchain has multiple uses in other industries aside from its application in the digital currency world. Here are some of its significant applications:
Smart contracts: This can be used for insurance. Smart contracts enable customers and insurers to validate and manage claims transparently and securely. The contracts can be stored on the blockchain and authenticated by the network, eradicating the opportunity for invalid claims.
Media content management and distribution: Blockchain can help media companies avoid fraud, minimize costs, and protect the Intellectual Property rights of their content. Content producers can utilize the blockchain to manage and distribute video, music, and other media content to consumers and business partners without the need for content delivery platforms.
Supply chain management: The technology’s unchangeable ledger and transparent network make real-time tracking of goods more straightforward and cost-effective. It also allows deeper audits for entries or goods queued up in the supply chain. It makes organizing, managing, and monitoring data more efficient.
Blockchain Basics: Key Things to Know as a Beginner
The whole idea behind blockchain technology and Bitcoin may look intimidating and difficult to understand at first, especially for beginners. But once you’re familiar with the blockchain basics and you start to comprehend the processes behind the technology, you’ll become more confident when dealing with digital currencies.
The adoption of blockchain serves as an essential step towards shifting to and using digital currencies and beyond. From how privacy and security works on the blockchain to how transactions are processed, below is a helpful visual guide that will walk you through how blockchain works. Let’s dive into it!
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