How the Blockchain works
- Categories: Tips
- 26 Nov 2019
In the first time you need to know what it’s the blockchain: the blockchain it’s a system in which a record of transactions made in bitcoin or another cryptocurrency is maintained across several computers that are linked in a peer-to-peer network.
You can understand the subject of the blockchain under 100 words:
You (a “node”) have a file of transactions on your computer (a “ledger”). Two government accountants (let’s call them “miners”) have the same file on theirs (so it’s “distributed”). As you make a transaction, your computer sends an e-mail to each accountant to inform them.
Each accountant rushes to be the first to check whether you can afford it (and be paid their salary “Bitcoins”). The first to check and validate hits “REPLY ALL”, attaching their logic for verifying the transaction (“proof of work”). If the other accountant agrees, everyone updates their file…
I think it’s better in image:
Why people talk so many about this technology? Because most people who got an interest in this technology don’t trust in the banking system. The main things with the blockchain is decentralization. People prefer to trust a system with millions of verifications than just a bank verification.
In addition, blockchain technology is broader than finance. It can be applied to any multi-step transaction where traceability and visibility is required. Supply chain is a notable use case where Blockchain can be leveraged to manage and sign contracts and audit product provenance. It could also be leveraged for votation platforms, titles and deed management – amongst myriad other uses. As the digital and physical worlds converge, the practical applications of Blockchain will only grow.
The Three Pillars of Blockchain Technology
The three main properties of Blockchain Technology which have helped it gain widespread acclaim are as follows:
For me the most important things after these three pillars is the time, you know, when you need to send money to somebody by virement, the time it takes for the transfer to arrive at the recipient’s bank can be up to 3 days. With the technology of blockchain and bitcoin, it’s just about minutes.
So, if you are interested in this technology, I can recommend some book like:
• Blockchain by Melanie Swan
• Blockchain Revolution by Don and Alex Tapscott
• The Book of Satoshi by Phil Champagne