Blockchain for Beginners: What is it & How Does it Work?
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Blockchain is one of today’s most talked-about topics, thus, you have most certainly heard about it. It has the potential to change our lives in a number of ways, from banking and finance to what we buy at the grocery store. From government decisions to retail sales, blockchain is being used all over the place and it is the new hot topic everyone is talking about. But what is it? And how does blockchain work? We have prepared all of your blockchain answers in this article!
When Was Blockchain Invented?
Blockchain was invented by Satoshi Nakamoto in 2008. Along with the invention of Bitcoin, blockchain became what it is today – a revolutionary technology that has been making waves all over the business world and beyond. Last year alone (2021), statista.com reported that more than 6.6 billion dollars (USD) was spent on blockchain solutions.
Why Was Blockchain Invented?
Blockchain was invented in response to the 2008 financial crisis. The idea of a digital ledger that is shared by all parties emerged as a way for Bitcoin transactions and other banking records to be verified without the need for any third party or central authority – this means that there’s no risk of what happened with Lehman Brothers happening again, where people were told their money had been withdrawn but it hadn’t actually gone anywhere. This new system promotes transparency while simultaneously reducing fraud because every record has an identifier linking back to its original sender.
Why is Blockchain So Great?
The beauty of blockchain is what matters isn’t where data lives, who owns it or even what format it’s in, so long as it can be delivered over an internet connection. Blockchain networks allow people like us to transfer money without going through banks — we simply send our funds from one electronic account directly into another.
Blockchain has blown up in recent years as it makes transactions easier to complete than ever before.
Two Types of Blockchains
There are two types of blockchain architecture. Public blockchains that are open to anyone and private blockchains which require an invitation or a password.
A public blockchain is what bitcoin runs on, what the Ethereum network uses and what the majority of other cryptocurrencies run on as well. In just 8 years, since 2013, over 10 000 new cryptocurrencies have been created, thanks to blockchain, as reported by statista.com. These networks offer full transparency in how transactions are executed but since they do not have any type of authentication process it can be difficult for these types of platforms to scale effectively without first solving some security problems with their architecture.
Both Bitcoin and Ethereum use so-called “proof-of-work” algorithms where each transaction verification takes around ten minutes due to the heavy computational load involved per operation performed by miners who solve complex mathematical equations before moving on to verifying subsequent blocks.
Private blockchains are permissioned, unlike public blockchains, meaning that they can only be accessed by those who have been granted access. This is what makes them relatively safe when it comes to security.
A private blockchain is what you need if you want to keep the transactions between a closed set of people. It’s perfect for large enterprises who don’t want to share their data with anyone outside the company and it’s also useful in cases where sensitive information needs to be kept within an organization but shared among its employees.
A private blockchain is what you need if you want to keep the transactions between a closed set of people. It’s perfect for large enterprises who don’t want to share their data with anyone outside the company and it’s also useful in cases where sensitive information needs to be kept within an organization but shared among its employees. A good example would be what happens when two banks decide that they are going to transact business together, such as exchanging money or trading securities. They will often start out by creating what we call “a bilateral smart contract”.
What is a Bilateral Smart Contract?
To be brief, a bilateral smart contract is what’s called the “middleman” in traditional contracts.
It will allow two or more parties to agree on what should happen if certain things occur by providing specific conditions for both parties and what they can expect if these events take place. It also provides guidelines about what would happen when one party doesn’t hold up their end of the bargain.
Where is Blockchain Used?
Blockchain is a technology that has no limitation on its potential applications. For example, blockchain can be used to track food through the supply chain by recording all information about where it comes from and how it changes hands as the product moves along in each stage of production (and then verifying this data). In another scenario, you might use blockchain for copyright protection so your content doesn’t get stolen – because every time an artist publishes their work onto the network with smart contracts, they will register everything including name and date of creation which locks out any other person from publishing anything under the same title or within a certain timeframe after original creation had been registered.
Blockchain is used in many industries, for example, in the financial industry, blockchains are used to regulate transactions without having a bank or other intermediary. In healthcare, it is also being looked at for rules and regulations governing patient privacy and data security.
Simply said, blockchain can be used almost anywhere in our modern world. Blockchain comes with endless possibilities and is only becoming more and more popular every day.
At the moment, Fortunly states that 0.71% of the world’s population is currently using blockchain. Though this number may seem small, that is approximately 50 million people. This number is increasing by the minute.
With blockchain revolutionizing technology today, it will certainly continue to make a huge difference in our lives. Who knows what blockchain might bring us next!