A Frequently Asked Question: What Is Blockchain?
18th September, 2018
We have been talking about blockchain and cryptocurrency since 2008. That was the year when the ever-popular “bitcoin” was introduced and started its move upward. Many online sources try to define and distinct cryptocurrency, blockchain and bitcoin, leaving most of the uninstructed public even more confused. In just an year the Google search requests for the keyword “blockchain” have increased by 250%. So what is a blockchain and how is it related to bitcoin?
Put simply, bitcoin is a cryptocurrency (or digital asset) and blockchain is a digitized, decentralized, public ledger of cryptocurrency transactions. This ledger can be written onto with new information, but the previous information, stored in blocks, cannot be edited, adjusted or changed. In order for this to happen, cryptography links the contents of the newly added block with each block before it, such that any change to the contents of a previous block in the chain would invalidate the data in all blocks after it.
By design, the blockchain is a decentralized technology.Anything that happens on it is a function of the network as a whole and cannot be controlled by any single entity.
According to Alex Tapscott, the CEO and founder of Northwest Passage Ventures, a venture capital firm that invests in blockchain technology companies, blockchain’s simple topology is the most secure today.
“In order to move anything of value over any kind of blockchain, the network [of nodes] must first agree that that transaction is valid, which means no single entity can go in and say one way or the other whether or not a transaction happened,” Tapscott said. “To hack it, you wouldn’t just have to hack one system like in a bank…, you’d have to hack every single computer on that network, which is fighting against you doing that.”
The blockchain network operates in a state of consensus,one that is reconciled every ten minutes. All transactions in a ten minute interval are grouped in a block. Each block contains reference to the block that came immediately before it thus creating a linear sequence that is incorruptible.
Can your business benefit from the blockchain technology?
Blockchain technology is already changing the way business is done. Smart contract are regulating business relationships without the need of a third-party regulation and possible interference. Supply chain management and quality assurance are more effortlessly performed with the blockchain registering origin, movement, quantity and quality of goods. Identity management, loyalty and rewards, escrow services.The list of blockchain applications grows longer by the day.But the most immediate benefit for business owners of any size has to do with payments. Blockchain payments are transparent, quick and secure. In the B2B world, blockchain can also reduce the amount of fees that companies pay to financial institutions (especially in the case of cross-border transactions).
Blockchain payments are gaining traction and changing the commerce space on the way. Adopting the payment system of the future early is a good move for businesses and buyers alike.