Introduction to Blockchain Technology: 7 Important Things You Need to Know
Of course, you've been hearing the term "blockchain" for a while. Have you been promising yourself that one day you'll finally sit down and read an introduction to blockchain?
That day has arrived. Just for you, we've put together a quick guide to seven things that you should know about blockchain technology.
1. Blockchain Technology Gained Fame Thanks to Bitcoin
Blockchain technology first came to the attention of the general public in connection with digital currency such as Bitcoin.
It was a way for currency to change ownership without going through a bank. The transactions were fast, discreet, and inexpensive.
But what exactly is a blockchain? Digital transactions are bundled into blocks of data which in turn join to form chains of data, creating what has become known as blockchains.
However, developers and entrepreneurs quickly saw ways that blockchains can be used beyond Bitcoins.
2. Blockchains Cut Out the Middleman
When you purchase an item at your local store using a check you automatically introduce a middle person to the negotiation - the bank. The seller can gain access to his funds only after the bank authorizes the transaction.
Blockchain technology makes the bank in our illustration irrelevant. Your purchase is between you and the seller.
Now expand your imagination beyond shopping at your local store. Blockchain technology could allow you to purchase stocks without going through a brokerage.
3. Blockchain Data is More Difficult to Hack
Transactions recorded and stored as part of a blockchain are heavily encrypted. No one can understand the personal records of another without access to that person's encryption key.
Any attempt to hack data runs into algorithmic trip wires.
The safety of blockchain technology has already convinced some governments to begin keeping their deeds on a blockchain to eliminate fraud.
4. No One Company is in Charge of the Blockchain Data
In a truly decentralized blockchain system, there is no central server. The data appears simultaneously on multiple computers operating in the system.
There is no ivory tower company housing the data as there is in the credit industry with its major credit agencies.
Hackers can't storm the gates of one company and damage the credit of millions of innocent people.
5. The System is Designed for More Accurate Data Keeping
Before new data can join the blockchain it must undergo testing to verify its authenticity.
Large numbers of computers subject the new data to a cryptographic analysis. The result is a record with more accurate data, for example, about your credit history than that kept by the current large credit reporting agencies.
If you've ever spent months, maybe even years, trying to get inaccurate information removed from your credit report, you'll appreciate the possibilities that blockchain technology represents.
6. Records are Transparent
All transactions are available for viewing. However, the specifics of the transactions remain private.
In other words, you could see that a purchase was made but you would not see the true identity of the buyer and seller. They would be listed only by unique alphanumeric character codes.
Transparent record-keeping holds everyone accountable. At the same time, cryptographic privacy allows people to maintain individual secrecy.
7. Blockchain Technology is All Around You
The future is here. In fact, it arrived some time ago.
Quietly, private companies and government agencies have incorporated blockchain technology into their way of doing business.
You can expect more entities to adopt the technology, especially those responsible for warehousing massive amounts of sensitive data.
So the next time you renew your passport, buy a plane ticket, or invest in a South America coffee startup, the transaction might be faster, more accurate, and safer.
And you understand why now that you know seven things about blockchain technology.
Go Beyond an Introduction to Blockchain
Now that you know something about how the technology works, why not keep expanding your knowledge and go beyond this introduction to blockchain?
As the use of blockchain technology grows, your knowledge base can expand along with it. How?
That's easy. You can remain current with the latest advances in this exciting peer-to-peer technology field by continuing to read our blog on a regular basis.