May 29, 2023
2 min read
If you have ever heard of Bitcoin, then most likely you have heard of Blockchain as well. Why? Because the latter is the technology at the very heart of virtual currencies, including Bitcoin, Litecoin and Ethereum.
Blockchain as technology was first spoken about in 1991 by researchers Stuart Haber and W. Scott Stornetta. However, it was not until 2009 that it had its first application in the real world.
If you google the name, the search engine will give you a fair number of articles about the technology which is normally called a “ledger that can record transactions”. Such transactions are made in the most efficient way. But let us get to the core of the matter.
In simple words, the name of Blockchain speaks for itself. It is a technology that implies chaining the blocks together.
Each block encodes any transaction made by a party and can be uniquely identified. What is a transaction? A transaction is any exchange of value, for instance, a purchase of groceries, or a money transfer.
As the term suggests, each new block is connected to the previous one. The chain is irreversible, which means that nobody can delete a block from it or insert a block in between the existing blocks.
Four steps must be taken here:
Eventually, every single block you have added becomes publicly available to view, so it is not anonymous. However, nobody can see the actual names of the participants, as the information about them is stored as a code. The fact that each computer in the network has a copy of each block makes it unbelievably hard for a hacker to manipulate information encoded in them.
On the other hand, how safe is it not to know who exactly is adding the blocks to the blockchain?
In Blockchain a linear, chronological sequence is used. Thus, it ensures that each new block with the data is added at the end of the chain. In Bitcoin, for instance, every block has a position that is identified as “height”. So, the newly added block would have the highest value in its position. This makes it hard to change the sequence of the blocks. Because the change in information leads to a different hash, the hacker would need to change the hash code in every single block that comes before that. How many years will it take a hacker to do it?
Blockchain simplifies the process of coordination and verification as there is always a single version of the records, or, in other words, a single database. To sum up, blockchain has plenty of benefits, such as security and quality assurance that make the technology quite appealing as an investment.
It has been estimated that in 2018 financial companies invested around $ 2.1 billion into the research of the new implications of Blockchain. Therefore, Blockchain is seen to have the potential to be used in many more ways than just financial transactions, but also decentralized applications, voting platforms and even server-free internet!
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