Introducing Blockchain Technology
Blockchain means many things to many people. For developers, it is a set of protocols and encryption technology for storing data securely. For business, it is a distributed ledger technology responsible for the explosion of new digital currency. For the technologist, it is the driving force for transactions like what the internet did for information. Whatever the way it is perceived, blockchain is a fascinating technology that enables first time in the history for the humans anywhere in the world to trust, collaborate and cooperate.
So, what is Blockchain?
Blockchain- defined as a peer-to-peer shared, immutable, distributed ledger infrastructure that facilitates the process of recording transactions and tracking assets. An asset can be tangible — a house, a car, cash, land — or intangible like intellectual property, such as patents, copyrights, or branding. Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs by disintermediation of centralized institution.
What is the difference between Blockchain and Bitcoin?
Bitcoin, the digital currency launched in 2009 by a mysterious person (or persons) known by Satoshi Nakamoto, is one solution that has been developed to address the challenges and high cost associated with the current transaction system. Unlike traditional currencies issued by central banks, Bitcoins have no central monetary authority. They are not printed in papers like dollars and yen, but they are transacted by people and businesses running a peer-to-peer computer network, akin to the network that underpins BitTorrent and Skype. Bitcoin has several advantages over the current transaction system including:
• Cost-effective by eliminating the need for intermediaries
• Efficient by recording transaction once and having it available for all parties through the distributed network.
• Secure by ensuring the transaction is not changed but only can be reversed with other transaction, in which case both transactions are visible
The Bitcoin is a blockchain application. Bitcoin and Blockchain are not the same. Think of blockchain as a platform or system software such as NodeJS, and Bitcoin is an application that runs on top of it. Blockchain provides the means for securely storing Bitcoin transactions and is the first use case of the blockchain. As such today thousands of such cryptocurrencies (https://coinmarketcap.com/all/views/all/) application such as Bitcoin is developed using blockchain technologies and the numbers are growing every day. Likewise, many different business applications can run on top of blockchain to store transactions as relevant to that application. As an example, the Toronto, Canada based company ‘ReliablyME’ is a blockchain based application that records and tracks social contracts as digital promises (IOUs) from any API-integrated application to award users with social credit credentials that demonstrate their character and authenticate self and social worth. The idea is to build an online network for social actions and social branding to help millions of people get into schools, employment, housing, insurance, and credit by earning social credit credentials based on their track record of fulfilling commitments.
Stay tuned for the future posts of my attempt explaining how Blockchain works, and the value of adopting this fantastic technology.