What Is Blockchain Technology, and What Does It Do?
At its most basic level, a blockchain is a type of shared database that differs from a typical database. It stores information; blockchains store data in blocks linked together via cryptography. As new data comes in, it goes into a new block. Once the block fills up with data, it gets chained onto the previous block, which makes the data chained together in chronological order.
You can store different types of information on a blockchain, but the most common use has been as a ledger for transactions. For example, when you purchase using Bitcoin, the transaction is recorded on the Bitcoin blockchain.
Other users on the network then verify a transaction like this, and once it is confirmed, it cannot be altered or deleted. This feature makes blockchain-based transactions much more secure and transparent than traditional transactions processed by banks or other financial institutions.
So, what are some potential applications of blockchain technology? Of course, the most obvious application of blockchain technology is in the financial sector. Many banks and financial institutions are already experimenting with blockchain-based transactions and exploring ways to use this technology to make their services more efficient and secure.
How Did Blockchain Technology Come About, and Who Created It?
The first blockchain was created in 2009 by an anonymous person or group known as Satoshi Nakamoto. The original purpose of the blockchain was to facilitate digital transactions using Bitcoin, but the potential uses of blockchain technology quickly became apparent to developers and entrepreneurs in other industries. Looking back in the past ten years, a silent revolution called “Blockchain technology” hit us, which resulted in significant innovations such as:
Bitcoin is the first and most well-known blockchain innovation. It was a proof-of-concept digital currency that launched in 2009. Although its price has fluctuated widely, bitcoin’s market capitalization now hovers between $10 billion and $20 billion. With the help of Acorns and other micro-investing alternatives, millions of people use blockchain technology for transactions, including remittances.
Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller directly written into lines of code. The code and the agreements contained therein exist across a decentralized blockchain network, eliminating the need for a middleman.
Ethereum, one of the most popular blockchain platforms, is built specifically for smart contracts and ICOs. One of the most significant applications of smart contracts is in the area of Initial Coin Offerings or ICOs.