Ten Things Everyone Needs to Know About Blockchain Technology
With cryptocurrency being so popular, consumers are getting more and more interested in the way that blockchain works. Unfortunately, little is known about this technology, unless a company is directly adding it. Read on below to learn about the ten things that are the most important to learn about this budding technology.
Blockchain Operates Similarly To A Distributed Ledger.
Blockchain maintains a record of every financial transaction that occurs for the individual, though no one actually runs it. The blockchain is basically run on a network of nodes, which are just computers on the system. Whenever a transaction takes place, it is published to the network’s nodes.
Since the blockchain comes from the creator of Bitcoin (Satoshi Nakamoto), it is capable of developing other kinds of digital currency and establishing their value. Some people liken the concept of blockchain to that of the innovative nature of the internet.
The Blockchain Records Cannot Be Altered by Any Entity Falsely.
Every transaction that goes on the blockchain will automatically update the accounts connected to it, and the transactions are then lumped together in a block on the chain. However, the only way that one of these transactions can be logged is when it is performed on the system. Every block has a timestamp and is logged on the day it happens, and each block references the hash of its preceding block.
Blockchain Can Be Used In Multiple Ways Beyond Cryptocurrency.
Most people see blockchain as synonymous with the cryptocurrency, but that is just one of the many ways that it can be applied. Since blockchain has such a detailed record of every transaction, other industries have started to keep it for their records and validation of good.
Blockchain Remains Transparent.
The word “transparent” is thrown around a lot concerning cryptocurrency and the blockchain, and it simply means that every party for every block can be held accountable. This helps to ensure that there is not a missing transaction or error on the blockchain. In the instance of a transaction that does not have the approval of the involved parties, it is recorded, which makes it easy to find and correct.
The whole network refreshes itself every 10 minutes, auditing itself without any need for an individual or company to do so. The information on the blockchain is protected from an override, which means these details are less prone to get out.
Blockchain Is Decentralized.
Everything that happens within the blockchain is logged with the use of the network. No one runs it, which ensures that businesses can maintain open source protocols for their exchanges. It helps to speed commerce along.
The Blockchain Is Not Digital Currency.
It is a common misconception that Bitcoin and blockchain are synonymous, but they are not. The only reason that they are even placed together in conversation is because Bitcoin’s role would not be possible without the recording of blockchain technology. Bitcoin is a cryptocurrency token, working in a similar way to fiat currency’s use in stocks. However, the blockchain is not transactable; it is the ledger upon which these transactions take place. Consumers can use blockchain to keep everyone honest, and that is a necessary task in the financial world.
Blockchains Are Available As Both Private And Public Options.
Most people do not realize that private domains and public domains are setup differently on the blockchain, though the mutual concept involves who is allowed to see the information. A public blockchain requires no permission or approval; it is open to read by any person that wants to see it. By having too many transactions at once, each verification takes more time, which is what Bitcoin is a victim of.
Private blockchains have one party that sees everything on it, though they cannot control what is posted, as per the rules of the network. The party can be a business or an individual, but they decide on the rules, regulations, and execution of the transactions. They usually post quickly, because it is not shared with millions of other users simultaneously.
Blockchain Offers Protection With Private Keys.
The only way to access the records of the blockchain is by being granted access, whether it is public or private. However, each user has a cryptographic key that is individualized to them that they cannot share. When they make a transaction, it is directly linked to the user that performed it.
Blockchains Permit The Use Of Executable Computer Coding.
The developers of blockchain for any transaction allow executable computer code that functions the same way for every transaction. This is a simplified explanation of smart contracts, since the agreement is setup before each party agrees to it.
Blockchain May Be The Safest Way To Account For Financial Transactions.
Challenges For Blockchain In The Future
Blockchain is the easiest way to preserve money, which is largely due to decentralization. The money is primarily protected from scam artists and thieves, since nothing is physically available to take, like with a bank. Furthermore, someone else cannot even access a private blockchain without a digital key to the wallet, and these identifying numbers are not easy to come by.
As much information as there is out there regarding blockchain, there are many experts and general consumers that are worrisome about its performance. Scalability is still an issue, though it varies by the platform. Much of this reason is because every transaction that takes place much be validated through every since node on the network, which means it fills up a little more with each transaction.
Luckily, explanations like the one above and the advancements that new platforms are making will hopefully make the process more streamlined for the general investor. Maybe, with integration throughout the rest of the industries it can be applied to, blockchain could the easiest way to remove the risk of fraud.