What is blockchain, exactly? This word may be strange or jargon if you are not a developer or coder. There are a lot of articles on blockchain on the internet right now. However, the majority of them contain difficult-to-understand explanations, especially for non-techies. This essay clearly explains things that even a young child who can read can grasp.
Blockchain and Cryptocurrencies
To begin with, we must establish a boundary between cryptocurrencies and blockchain because many people are still confused about the two terms. Others believe that bitcoin and blockchain are the same things, which is incorrect. The blockchain is the technology, and cryptocurrency is the application built on top of the blockchain. To illustrate, Bitcoin is a cryptocurrency that runs on blockchain technology. Without a blockchain, Bitcoin would not exist. Like the internet and Facebook, for example. Without the internet, the latter is inaccessible.
What is blockchain, exactly? A blockchain is a sort of database in which all data resides. However, unlike a traditional database, which stays in one location, the blockchain is distributed and dispersed among several users. Let us have a look at an example. YouTube, Facebook, and even banks keep their data in a secure location that no one can access. Meanwhile, the bitcoin blockchain is present on all bitcoin user servers and computers (nodes). The bitcoin blockchain records all transactions that take place on the bitcoin network.
And all bitcoin servers and PCs (full nodes) have a copy of the blockchain stored on their hard drive. Bitcoin is only one of the many cryptocurrencies available. Note that there are other sorts of blockchains, each with its own sets of capabilities, such as Ethereum and XRP. Crypto trading platforms come into play to ease the trade of various coins. Examples include Binance, Gemini, and Bitcoin Motion. Visit relex.io to find out more.
Security is one of the Main Features of the Blockchain.
The blockchain is well-known for its security. You cannot change the info once it is in the blockchain. The blockchain consists of a series of blocks, each of which contains data such as transaction records, personal information, or documents. Before adding a new block to the chain, one must validate it with a network of nodes (miner computers) to ensure that it is genuine. This transaction adds up to the blockchain once everything gets verified. According to Forbes, blockchain strives to be immutable, tamper-proof, and democratic. Decentralisation, Cryptography, and Consensus are the three distinguishing qualities that help it do this.
The blocks on the blockchain are all connected. This point implies you cannot merely change the content of a block since other blocks related to it would notice. To do so, you will need to alter all network blocks. And each of these blocks is followed by an agreement or consensus. On the bitcoin network, 10,000 nodes are now active. Let us use an analogy to explain why it is unthinkable to alter a transaction on the blockchain.
Assume you are a well-known author who has published a book. Your book has sold over 200 million copies throughout the world. Imagine 200 million people have read your book. And there is someone who doesn’t care about you, and he wants to change the story written in your book.
He wants to alter the version you wrote to convince everyone that it is the original. Who do you suppose is going to believe him? Remember, the book has been read by 200 million people, with only one person objecting. Who can be trusted? It is, of course, the majority. And if he wants to modify the version of the book you issued, he must bring together all of the people who have it and change the version. So, if you think about it, it is inconceivable to do it because the book has already dispersed over the globe.
Those concepts are now analogous to the bitcoin blockchain idea. The bitcoin network’s participants have copies of blockchain records saved on their computers. Hackers must incorporate every machine that participates in the bitcoin network to hack a transaction on the blockchain network. And it isn’t that simple. A quantum computer capable of processing massive amounts of data is still non-existent.
According to experts, this form of computer might develop in the next 10 to 20 years. Perhaps by then, blockchain technology will have progressed; just like in Google‘s early days. A long time ago, it was vulnerable to hacking. Hackers often take down their servers. But take a look at how far they have progressed.
Perhaps you routinely use Google to search the internet. How many times have you noticed it is out of reach? You can’t recall a certain point in time, can you? That is due to advancements in Google’s technology. It can adapt to any threats as time goes on. With blockchain technology, experts see the same thing. It will get more effective and efficient over time.
We just need to comprehend the reality we live in as enthusiasts and investors. We frequently enter the cryptocurrency market to invest and earn money through trading, to invest, and other methods. But we don’t know what it is. We forget why technology was created and what benefits it may provide.
Others may find it unusual that the monetary system has undergone such a drastic change. But that’s fine. These developments are brought about by technology, which we should endeavour to comprehend and not dismiss. Blockchain isn’t flawless, but then again, nothing is. It’s still a developing technology that’s becoming better with each passing day. Most security flaws are swiftly rectified, and in the worst-case scenario, a new version of the blockchain is created.
If you believe in blockchain technology, you start to wonder how to start crypto trading. At this point, you have to start studying crypto technology. Without prior research, everything will be confusing. You can take advantage of the educational materials for crypto on websites like Coindesk to learn more about the crypto industry. This is not financial advice, always do your research, especially in investing in cryptocurrencies.