Blockchain & cryptocurrencies have been a buzzword in the tech space, with over 1 trillion dollars in the volume of cryptocurrencies and an NFT that sold for about 68 million dollars.
What Is Blockchain?
Blockchain is a connection of blocks in a chain-like manner. It is correct but doesn’t make sense. What are the blocks? Why are the blocks forming a chain or why is it a chain of blocks? You will understand what all this means as you read further.
The Hype And Game-Changer Factor
A lot of people say blockchain is just hype and would fizzle out very soon while some say it is a game-changer and would disrupt a lot of industries. The two opinions are right, and for every new technology, there is always a time only a few understand it and the hype moment would finally become a norm.
The internet was once like that until the dot-com(.com) bubble and things became normal again.
Blockchain is a game-changer because we have seen so many real-world applications of blockchain across industries. These solutions are working from supply chain to healthcare and the biggest of them all is finance. What is the hyped tech we are talking about?
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. In other words, it is a public database that everyone can access and read, but the data can only be updated by the owners. Instead of the data residing on a single centralized server, it is copied across thousands and thousands of computers worldwide.
From the definition, we can see that blockchain is a shared ledger/database to record transactions and track assets. The data transactions are copied across thousands of computers (nodes) worldwide.
To get an understanding of Blockchain it is important to know how blockchain emerged and the context in which it was developed.
Deeper Understanding: History and Context
Blockchain emerged as a result of the need for an efficient, cost-effective, reliable, and secure system for conducting and recording financial transactions and the first manifestation or use case of Blockchain was Bitcoin. Traditional finance had so many issues such as transaction time, duplication of efforts, lack of transparency and Cyberattacks. If you were to send money to your relative in another country or continent and you’re using a Bank, your funds would go through intermediaries and you will have to pay huge fees for the transactions, each intermediary would have to keep their own in-house ledger, half of the world don’t have access to financial services.
The first use case of blockchain “bitcoin” a digital currency came to establish a peer-to-peer cash payment system. What this means is that you can send money to your brother in Europe from Africa without going through banks and paying huge fees and you can receive money from someone without trust issues because the Blockchain keeps a record of all transactions and those transactions cannot be removed or changed.
Blockchain opened a new dimension of opportunities across various industries and for people from buzzwords like NFTs, and De-Fi to crypto billionaires, influencers and blockchain developers. You may be expecting more about cryptocurrencies in this article, we must first understand what the blockchain is because you can’t decouple blockchain and cryptocurrencies. Blockchain is the foundation on which cryptocurrencies exist. Crypto was the first use case of blockchain and it is still the biggest space, so in our next article, we will talk about cryptocurrencies.
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