Every day that comes by we see more and more projects and companies talking about Blockchain technology. We look at its benefits and the way it is changing how we do business and operate. That’s why I’m gonna try to explain it to you as I see it.
The first time the term Blockchain came to life was in 1991, brought by Stuart Haber and W. Scott Stornetta. Their first work involved working on a cryptographically secured chain of blocks. here, no one could tamper with the timestamps of documents. After this, we have to go all the way to 2008 which was the YEAR!
What is Blockchain Technology?
Blockchain is one of the greatest innovations from the 21st century without any doubt, at least in my opinion. It was introduced, for real, as the distributed ledger behind Bitcoin transactions by the anonymous Satoshi Nakamoto. He is accredited as the brains behind blockchain technology. Unfortunately, very little is known about Nakamoto. Many people believe he could be a person or a group of people that worked on Bitcoin, the first application of digital ledger technology.
Now that we have a first technical approach, let’s get to the point. What is Blockchain Technology? A blockchain (or Distributed Ledger Technology) is a distributed database that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in a digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions. The biggest innovation of a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party through the consensus algorithm (Proof of Work).
How Does Blockchain Technology Work?
As we said before, blockchains store data in blocks which are then linked together via cryptography. As new data comes in, it is entered into a fresh block. Once the block is filled with data, it is chained onto the previous block, which makes the data chained together in chronological order. Different types of information can be stored on a blockchain, but the most common use so far has been as a ledger for transactions. In Bitcoin’s case, blockchain is used in a decentralized way so that no single person or group has control, all users collectively retain control. Decentralized blockchains are immutable, which means that the data entered is irreversible. For Bitcoin, this means that transactions are permanently recorded and viewable to anyone. Here we have a more visual example of how blocks are linked together:
Once again, you got the technical part but that can be found in every other article about Blockchain so now I’m gonna explain it as if you were my friend. Imagine that the blockchain is a pack of blank sheets of paper. Each blank page is a block and each line written is a transaction. I’m gonna make an example for an easier way of seeing some of the main features of Blockchain:
Blockchain Technology Use Case Example
(1) We take a blank page (block) and write a line with the information of a transfer of money between two persons ( “Javier SEND 100 USD to Pablo” ). This written message would be a transaction and now we can not take it back because of the IMMUTABILITY of the Blockchain. (2) Next we keep writing transactions of money transfers. I can write, you can write, whoever has a computer with access to the internet can write because most Blockchains are PUBLIC and (3) as everyone can write, everyone is watching was is being written in the paper so it gives SECURITY. That’s why it is highly complicated that you could fool the majority of people in order to change a transaction or write the wrong one.
Imagine that we complete the paper’s capacity for a number of transactions. Now that paper would be a block, we put it aside and keep writing on another paper (block) until we complete it. We put one paper next to another and that way we would be creating a blockchain. Once again, as everyone is watching you can not take page #5 and put it on top of page #3. Everyone will see you are trying to make a change and the immutability does not allow it. That’s why it is called blockchain because we have a lot of blocks tied together (in an order of creation so #3 goes before #4 and after #2).
Conclusion
I hope that with this article you are able to see and understand Blockchain Technology in an easier way. This is only a short explanation of how Blockchain works and what it can be used for. That part I’m gonna leave it to the next articles. We will talk about some of the benefits of using Blockchain. We will also dwell on real use cases such as traceability in the supply chain, tokenization, and a lot more.
Personal Note From MEXC Team
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