You’ve certainly heard about Bitcoin by now, but how much do you actually know about it? Most of us know that Bitcoin is extremely valuable and that if you got into it a few years ago, by now, you’re probably a millionaire.
But, BTC is just a currency. What makes it truly special is the revolutionary technology behind it.
The technology behind Bitcoin is called blockchain, and blockchain is the thing that has not only already changed the world but will continue to do so in the future.
Today, we’re going to talk to you about blockchain. We’re going to teach you what it is, why you should care about it, is we’re going to tell you all about how’s it going to change the world. Let’s begin!
What Is Blockchain?
To put it simply, blockchain is simply a method of storing information. So, how can a method of storing information make someone filthy rich and change the world? Well, let’s see.
We’re not going to get too technical with it, so we’ll try to explain this in layman’s terms so everyone gets exactly what we’re talking about.
Think of blockchain as a shared virtual ledger that is owned by the users on the network. With each transaction or a change to that ledger, the blockchain is updated. That is the essence of the blockchain.
For instance, every transaction done on the blockchain is encrypted, hence the name cryptocurrency. So, if person A sends money to person B, that transaction is cryptographically verified on the network, and the entire network is updated. Also, every transaction is visible to everyone that uses the network since everyone’s using the same one.
But doesn’t that make the blockchain vulnerable? Actually, it’s quite the opposite. And, that’s also the first revolutionary thing about blockchain.
It Makes Financial Transactions Perfectly Safe
You see, every time a transaction is done, the network’s updated and encrypted in its entirety (this is a gross oversimplification, but it’s easier to understand it this way). So, when you look at the blockchain, at any given moment, the network contains information of every previous transaction that has ever happened, and all of that data is encrypted. With new each transaction, the entire blockchain’s updated and encrypted, so even if you wanted to go back and change something – you couldn’t do it. Why? Well, unless you found a way to decrypt every single transaction that has happened on the blockchain, in reverse order, there is no way to change a single thing without affecting the other, making financial transactions on the blockchain perfectly safe. Still fuzzy? Well, here’s another example.
Let’s assume you click here, and you buy some Bitcoin, and for the sake of argument, let’s assume that was the first-ever transaction on the blockchain. Let’s give it the value “AAA”. Upon encryption, the value of changes to “XYZ”. Now, you buy some more BTC, and the value of that transaction is “CCC”. Upon encryption, the value of the second transaction becomes “R6T”. Then, the “R6T” connects to the “XYZ”, and they’re both encrypted together, ending up as “ZB7”. And that goes on and on.
As we’ve said, this is a gross oversimplification of how the blockchain works, but it’s close enough.
It’s Completely Decentralized
The main idea behind Bitcoin was to create a network of decentralized finance. What does that mean? Well, that means that you have a currency whose value is not determined by centralized power, like a country. Instead, the value of a single Bitcoin is determined by its users and their “belief” in its value. It sounds kind of weird, but when you think about it, everything in this world holds value because we believe it holds value.
Are diamonds valuable? They weren’t that long ago. Oil’s valuable? It wasn’t back when we had no need for it. See? It’s all about perceived value.
But, the value is not the only thing that matter when it comes to a decentralized network.
The entire blockchain works because there are people that are using it. There is no board, a president, or a CEO that controls what’s going on. The power of the entire network lies with its users. The network is supported by all the computers in the world that are running the algorithm. Even if half the people decided that starting today, they don’t want to have anything with it – the network would still run efficiently.
But, what does this all mean in the “real” world? Well, for starters…
Many don’t see the connection between blockchain and healthcare, but think of this. Let’s assume that John Doe is very sick and has to get treatment across the world. Before that, he visited dozens of doctors, and he stayed at dozen hospitals, so his medical records are scattered all around. Also, there’s a chance some of it’s lost, mishandled and so on. Also, transferring the records from one place to another would be a nuisance – especially if you have to send them internationally.
Now, let’s assume his records were on the blockchain. None of the problems we’ve mentioned wouldn’t have mattered. All of the records would be secure on the blockchain, safe from any tampering or changes, and they would always be easily accessible.
Another thing that’s great about blockchain are smart contracts. As we have already mentioned, once something’s written on the blockchain – it can’t be changed. So, let’s assume that you’re trying to sell a home. You would have to get all kinds of documentation, proving you’re the owner and all that jazz. That takes a lot of time and effort, and you have to go through several institutions to get all of that.
Now, imagine all of that data in one place. Imagine that once you buy the house, all of that data is kept within a smart contract that’s safely stored on the blockchain. A smart contract on the blockchain would hold all the information about previous owners, sale prices, proof of origin, proof of ownership, and so on. Wouldn’t that be neat? You’d sell or buy a home within minutes, and the name of the new owner would just appear on the contract.
There are so many other things that blockchain can be useful for – we just don’t know it yet. Who knows how far this whole thing will get once it really hits the fan and once everyone embraces it. We can only dream it.