This New Technology
Many experts have talked about the revolutionary potential of the blockchain technology, which is used as basically system for recording digital transactions of bitcoin. It has also been recognized as the technology that can replace expensive accounting and payment networks in the financial industry and prevent money laundering.
But, what really is a “blockchain”?
Shortly, it’s a decentralized, digital, public ledger, recording information inside the network of blocks. Let’s start by breaking down that sentence.
First, a blockchain is “digital”. The meaning is that the blockchain is a virtual chain of information. Digital information is stored, generated and processed electronically.
Second fact is it’s decentralized feature. Traditional banks use a centralised ledger system to keep track of transactions and accounts. The banks control the data that is stored, while Blockchain technology, is an entirely different form of storing data. There is no master database that controls the information of records. Instead of it, many individual computers store and authenticate each transaction and record it in the blockchain network. That’s why it is qualified as a decentralized system.
How does it work?
Actually, Blockchain is a network of blocks, each holding an information. For example, when there are made Bitcoin transactions, each block records information, which goes into the blockchain and remains there as a permanent part of the database. As more transactions take place, more blocks get created, and more information is stored within the blockchain.
Against the common viewpoint, blockchain is not that new of an idea. It was first presented in 1991. Only in 2008 it finally become conceptulised and put into use through the invention of Bitcoin.