The word “blockchain” has been floating around for the past couple of years. Although most people have heard the word, they may not really understand what it really is. This article will shed some light on what a blockchain is and how it can be implemented to make companies more efficient.
What is blockchain?
A blockchain can be thought of in a literal sense as a chain of blocks connected. To put it in perspective, think of each block as a set of data. Computers can run algorithms to “mine” this data. The algorithms that the computers, or miners, use vary depending on what the blockchain is trying to accomplish.
Why do we need blockchain?
Blockchain is needed so there is a more efficient, safer, and quicker way to do the processes of everyday life. It can be used to send data securely, run a transaction, create a new voting system, as well as many other things. Any process used today can be improved by adding a blockchain dimension to it.
What is the purpose of blockchain?
The purpose of a blockchain is to remove direct control from a single entity and distribute it to multiple entities. Eliminating the control from one entity allows anyone using the blockchain to be assured their data or transaction cannot be manipulated or controlled. This is known as decentralization.
How does blockchain work?
Computers work with each other in a pool, or nodes, to solve problems that we encounter. To ensure the miners are doing the work correctly, all the miners check each other through what is called Distributed Ledger Technology (DLT). The DLT shows all the data that has been mined in the blockchain and acts as a proofing tool.
Why is blockchain secure through decentralization?
No one computer can control a node, so DLT is the way blockchain achieves decentralization. This decentralization is what people find the most appealing about blockchain technology. DLT creates an audit trail that allows anyone to go back and see the completed path of any transaction that went through the blockchain.
How does blockchain relate to cryptocurrency?
Blockchains have also introduced a new form of currency called cryptocurrency. Cryptocurrency can be distributed to miners as their payment for doing their mining. Those cryptocurrencies can then be held or converted into another currency through a broker.
How do ordinary people use blockchain every day?
Blockchain is starting to intertwine itself into the everyday processes of more businesses. Companies can use blockchain to send money overseas safely and efficiently, create easier-to-track supply chain management systems, cut down on fraud, and more. The opportunities with blockchain are endless.
Understanding the key concepts of blockchain will put you ahead of the competition in the future with the use of blockchain growing more and more.
If you have questions or want to learn more about blockchain, let us know.