Discussing blockchain

As Bitcoin became a sensation, many people became familiar with it, as the technology behind cryptocurrencies, but blockchain’s potential uses extend far beyond digital currencies. Today we are going to dig into the topic and sum up the basics of what we know about this new ground-breaking technology.

The basic concepts

Currently, most people do transactions through a trusted middleman, like a banking system. This raises questions about security and transparency. Not everyone believes that those third parties are trustworthy enough and protect our data well.

With blockchain customers and suppliers connect directly, without the need for a third party. Blockchain provides a decentralized database, or “digital ledger”, of transactions that everyone on the network can see. The network is basically a chain of computers that must approve the exchange before it can be verified and recorded. The main advantage of the technology is that the questionable middleman is simply eliminated from the process of transferring money, and trust is based on the transparency of the actions of the community.

How does it work?

Let’s take the example of Bitcoin and how transfers are made there. The blockchain stores the details of every transaction that has been made with the individual currency, and with the exact records, it makes sure that the bitcoin is only spent once during one transaction.

So, if Joe wants to spend money to Mary, the transaction is represented online as a block. This block is shared with every party in the network, and those in the network approve the transaction as valid if everything is fine regarding the provided information by the block. Then the block is added to the chain which is a transparent record of all transactions of the bitcoin. And then, finally, Mary gets her money.

What is the future?

The technology can work for almost every type of transaction involving value, including money, goods, and property. In theory, anyone with an internet connection would be able to use it, but as of now only a small part of the population is using it, however, it is increasing at a rapid speed. The problem that is jet to be solved is regarding the number of transactions that can be made at the same time, which number is jet in no comparison to the number of transactions that credit card providers can carry out at one time.

However the level of interest being shown in this technology demonstrates its potential in the future, but it is still a question when and if the technology will become mainstream.

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