The Mystery of Blockchain – Michael Mathias – Medium
While blockchain has become the talk of the day and essentially the technology for the future, there has come to be so many misconceptions as to what it really is. Like any complicated and popular topic, the facts about blockchain can often be missed or misunderstood. Here are the two common ones;
- Blockchain is Bitcoin: Although Bitcoin is a decentralized digital currency built on top of a blockchain, bitcoin is not blockchain. This concept has confused quite a number of people, including me, and this is understandable, after all, it was the same person who invented blockchain that created bitcoin, a person by the name Satoshi Nakamoto. His invention of bitcoin on an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way has inspired other applications and blockchain which is readable by the public being used in cryptocurrencies.
- Blockchain’s application is limited to cryptocurrency: In today’s world, there quite a number of cryptocurrencies in use, and all these depends on the blockchain technology. This is so because of the functionality made available by this technology. However, when we dive deep into understanding the concept of blockchain, we will get to see that it’s application is not limited to digital currency.
Well if the blockchain isn’t the above, then what makes it this revolutionary piece of technology. The blockchain is a growing list of record, called blocks, being interconnected where each block contains a cryptographic hash of the previous block. It is a form of data structure where data is stored in blocks that are interconnected to form a chain. Now its outstanding feature is that it is stored on the different nodes around the world, so there is no single point of failure. Here are some key distinguishing factor of the blockchain;
- Use of smart contract: Through the use of smart contracts along with having no single point of failure, it would be possible to transfer things of value. It essentially would help prevent any form of scam that is prevalent today. Everything would be digitized and digitally secured by the power of cryptography upon the blockchain.
- Cuts out the middle man: At the core of the blockchain technology is a peer-to-peer system which is secured by cryptography, hence it has the power to remove lawyers, accountants, agents, etc, from the middle of any transaction, hence saving that third party fee.
- Speed: It allows for deals and transaction to be completed far quicker. For this and the above reason, we see blockchain being applied to currency exchange. Imagine bitcoin, you transfer this to anybody where ever they may be located, without the use of PayPal, and its associated fee, within just minutes.
Although there are other factors that distinguish the blockchain technology, these are the key ones and why it is so revolutionary. From the above you can now start to picture its other applications apart from cryptocurrency, IPFS is applying this technology in decentralizing the web, Steemit is applying this in social media, Storj is applying this in cloud storage, and so many more.
The world is evolving, and technologies like this, the internet of things (IoT) and machine learning are making this possible. Soon we would move from a centralized internet system to a decentralized one, from use of government fiat currency to a digital cryptocurrency. It is a new technology and no one knows what is coming, but it sure is revolutionary.