BLOCKCHAIN EXPLAINED IN 3 MINUTES
Blockchain technology is a brilliant invention created to power huge and voluminous value exchange in our digitally evolving world. It is a digital ledger used to record virtually all forms of value. Data stored on this ledger can be a token of value or cryptocurrency. It is simply a value exchange protocol. The Blockchain was created to power and manage digital currencies e.g. Bitcoin, Ethereum etc. However, its application has gone beyond digital currencies and it is already being applied to various other uses in several fields. To a large extent, this technology has brought us closer to the future that we imagined, and it is constantly evolving.
WHY BLOCKCHAIN?
Blockchain is a decentralized transactional system which means that transactions carried out on this technology do not rely on a central point of control or authority to maintain or secure it. This attribute makes Blockchain a trustless network of data storage that operates on a peer-to-peer basis. The trust is shared by all and the system is fairer than a trusted or centralized system where we put our trust in an entity e.g. a Bank.
Decentralized systems powered by Blockchain are the next logical step in the evolution of the internet. We all have various examples the injurious consequences from decision making in a centralized system of authority that have been
HOW IT WORKS
Transactions on the Blockchain make use of innovative agreement protocols across a network of nodes (computers) to validate and record data in a manner that is incorruptible. Here, information is recorded and stored in a form that is nearly impossible to manipulate because there are multiple copies of data, accessible to all and it will require a complex agreement before the stored information can be edited.
Every node created gets a real time update on the Blockchain and this distribution is used to verify the order of things. When a new block is created, each node verifies that the Block has not been compromised, and then adds the new block to their Blockchain. Hence, any attempt by an individual to nullify or invalidate a block (data) will invalidate a whole chain of information.
There are millions of transactions on a Blockchain and these transactions are grouped into blocks. A block contains a series of transactions and each block is chained together with its previous block. To cause a transition from one state to the next, a transaction must be valid. And for a transaction to be valid, it must go through a process called Mining.
Mining is the process that powers the decentralized Blockchain. Miners are simply independent and interconnected nodes that use computing power to verify transactions and add them to the public ledger- (Blockchain). When a group of nodes (i.e. computers) use their complete resources to create a block of valid transactions, the miners are rewarded with newly created digital currencies in addition to transaction fees distributed evenly among the whole network.
Therefore, we can say that Miners power the Blockchain technology and the technology powers the decentralized transactions all over the world in real time. Without Miners, a Blockchain technology will not be possible.
We can also say that Blockchain proffers an honest and accurate way of data storage that is considerably more secure than a centralized transactional system.
The advantages of Blockchain are numerous, here are but a few;
· It is cheaper, compared to the cost of transactions in a trusted system.
· It is made public to ensure transparency and accountability, yet, built to ensure privacy of users due to a complex cryptography.
· Data stored are immutable. I.e. it cannot be erased, lost or corrupted as it not stored in a central location. It is spread across multiple devices in a peer to peer (P2P) network.
· It is a value transfer system that no malicious third party or central authority can tamper with.
· Gigantic volume of transactions is executed swiftly and efficiently on a Blockchain.
Blockchain technology can be applied to various uses e.g. Election poll, Disaster emergency recovery fundraise, Health care system regulation, Fashion Industry, Real Estates, Art etc.
