Understand Blockchain technology

February 21, 2018 Quick read

In all likeliness you have heard the word “Blockchain” mentioned numerous times during 2017. If you have not heard about “Blockchain” then the word “Bitcoin” might ring some bells. Bitcoin was the technology which made many people millionaires last year. Bitcoin and Blockchain are actually connected. The Blockchain is the reason cryptocurrencies like Bitcoin function effectively.

What is Blockchain?

The Blockchain is actually like a Google spreadsheet that is shared by the whole world (cryptocurrency users obviously). In Blockchain the data is a block and each block of data is connected one after other in a chronological order just like the spreadsheet hence the term was coined the “Blockchain”. The real-time update of fund transfers and balance info of all Bitcoin users are stored in this spreadsheet. It is actually a good way to keep track on the current flow of cryptocurrencies around the world.

Advantages of Blockchain

There are many advantages to Blockchain technology that other alternative cannot provide such as,

  • The user has the complete control of all the information and transactions.
  • Blockchain data is complete, secure, reliable, consistent, accurate and accessible.
  • The user can trust completely on the protocol that Blockchain follows that eliminates the need for a trusted third-party.
  • Cost-effective for database solutions.
  • The Blockchain is a robust and durable database model, which is transparent and incorruptible.
  • Blockchain cannot be hacked and the entry cannot be altered.

How does it work?

Many people don’t know about the working of Blockchain. In a recent survey by HSBC, out of 12,000 respondents in 11 countries, 80% of people couldn’t explain how the Blockchain works. In reality it is a simple process and is quite easy to understand.

Blockchain writes just a few lines of code to complete the transaction. And the code will run in a secure environment and will only be accessible to the authorized users.

  1. When “A” wants to send money to “B” a code is written and the code is then represented as a block.
  2. The block is submitted to every party in the network.
  3. Then the block is approved by all those parties.
  4. When the block is approved by all the parties, it is added to the chain that provides a permanent and transparent record of the transaction.
  5. The money is transferred from “A” to ”B”.

Each block of code data will contain the amount that needs to be transferred, the address of “A” and “B”, the account balance of both accounts before and after the transaction.

Future of Blockchain technology

The Blockchain technology has become the mother of over 100 billion US dollars in the cryptocurrency market. Blockchain technology is expected to be used in many future technologies. As per a report by PwC, Blockchain attracted an investment of 1.4 billion US dollars. Apart from the business point of view, Blockchain technology has applications in sectors such as education, healthcare, military defense, etc. There are many cryptocurrencies that are using this technology for their applications. Hence, this is what Blockchain is and how it works to make you a millionaire.