What Is Blockchain Technology?

One of the hottest topics of conversation around is cryptocurrency and blockchain. If you are wondering exactly what blockchain technology is then this post is for you. Find out what all the hype is about.

 

What exactly is blockchain technology? This is a question I have gotten from several of my readers, so since it is such a hot topic, I decided to just do a post about it. With Bitcoin, Litecoin, Iota and several other cryptocurrencies being so popular, it’s no wonder people want to know about everything surrounding it. Grab a cocktail and settle in for this one.

Blockchain Technology

Blockchain technology is an invention by a person or group of people known as Satoshi Nakamoto. Blockchains are secure databases by design. The concept was introduced in 2008 and then implemented for the first time in 2009 as part of the digital bitcoin currency; the blockchain serves as the public ledger for all bitcoin transactions.

By using a blockchain system, bitcoin was the first digital currency to solve the double spending problem (unlike physical coins or tokens, electronic files can be duplicated and spent twice) without the use of an authoritative body or central server. Since its development, it has evolved into something phenomenal. By allowing digital information to be distributed but not copied, blockchain technology created the backbone of a new type of internet. Originally devised for the digital currency, Bitcoin, the tech community is now finding other potential uses for the technology.

Like the internet (or your car), you don’t need to know how the blockchain works to use it. However, having a basic knowledge of this new technology shows why it’s considered revolutionary. The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.

A blockchain is a distributed database, meaning that the storage devices for the database are not all connected to a common processor.  It maintains a growing list of ordered records, called blocks. Each block has a timestamp and a link to a previous block.

Cryptography (hence the word cryptocurrency) ensures that users can only edit the parts of the blockchain that they “own” by possessing the private keys necessary to write to the file. It also ensures that everyone’s copy of the distributed blockchain is kept in synch.

Blockchain Breakdown

Imagine a digital medical record: each entry is a block. It has a timestamp, the date and time when the record was created. And by design, that entry cannot be changed retroactively, because we want the record of diagnosis, treatment, etc. to be clear and unmodified. Only the doctor, who has one private key, and the patient, who has the other, can access the information, and the information is only shared when one of those users shares his or her private key with a third party — say, a hospital or specialist.

How Blockchain Works

On the internet, anyone can publish information and then others can access it anywhere in the world. A blockchain allows anyone to send value anywhere in the world where the blockchain file can be accessed. But you must have a private, cryptographically created key to access only the blocks you “own.”

By giving a private key which you own to someone else, you effectively transfer the value of whatever is stored in that section of the blockchain.

So, to use the bitcoin example, keys are used to access addresses, which contain units of currency that have financial value. This fills the role of recording the transfer, which is traditionally carried out by banks.

So now that I have explained blockchain to the best of my ability, do you think blockchain is the wave of the future? Share your thoughts below in the comments. Also please use the social share buttons and share among your social platforms, please and thank you.

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20 comments on What Is Blockchain Technology?

  1. robin rue
    January 9, 2018 at 4:31 am (2 weeks ago)

    I love that you used bitcoin as an example. My husband wants some and I won’t let him get any because I keep telling him it’s not real. Thanks for the explanation of blockchain technology because I had never heard of it before.

    Reply
    • tracie45
      January 9, 2018 at 8:54 pm (2 weeks ago)

      Robin, I am waiting a while myself on that Bitcoin and some of these other cryptocurrencies. Thank you for reading and commenting.

      Reply
  2. Marcie W.
    January 9, 2018 at 11:11 am (2 weeks ago)

    I always marvel at the growth of technology and digital transactions seem to be the wave of the future. Despite the security of a blockchain, I think it will be awhile longer until I am fully on board.

    Reply
    • tracie45
      January 9, 2018 at 8:52 pm (2 weeks ago)

      I agree Marcie. I am waiting to see how all of this plays out. There have been a couple of breeches already so I can understand waiting a while longer before getting on board. I am right there with you. Thank you for reading and commenting.

      Reply
  3. Heather
    January 9, 2018 at 12:24 pm (2 weeks ago)

    We are in such an interesting time with technology affecting every element of our lives. I’m very curious to see how digital currency will continue to develop. Blockchain isn’t something I had heard of, but I can see how it will be useful for so much more than just finances.

    Reply
    • tracie45
      January 9, 2018 at 8:50 pm (2 weeks ago)

      Heather, I am excited to see how all of this plays out. Technology is a beast that has no intention of being tamed. Thank you for reading and commenting.

      Reply
  4. Neely Moldovan
    January 9, 2018 at 1:07 pm (2 weeks ago)

    Wow this is super interesint. I knew nothing abou this. I love learning new things.

    Reply
    • tracie45
      January 9, 2018 at 8:48 pm (2 weeks ago)

      I am glad you found it interesting and learned something from it Neely. Thank you for reading and commenting.

      Reply
  5. Beth
    January 9, 2018 at 2:32 pm (2 weeks ago)

    Totally! It seems very exciting to imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision. However, I worry that it will remove the necessity for lots of jobs. What do you think?

    Reply
    • tracie45
      January 9, 2018 at 8:47 pm (2 weeks ago)

      Beth it is very exciting! But as far as the jobs, I suppose we would need someone to enter all the information and maintain the chain. Thank you for reading and commenting.

      Reply
  6. Ave
    January 10, 2018 at 10:28 am (2 weeks ago)

    I have to say that I don’t know much about cryptocurrencies but they seem to be the future. From your explication, it sounds that blockchain is really secure.

    Reply
    • tracie45
      January 11, 2018 at 1:41 pm (1 week ago)

      I think they are the wave of the future as well Ave. I don’t know how I feel about it. I am still on the fence about investing into it. Only time will tell. Thanks for reading and commenting!

      Reply
  7. CourtneyLynne
    January 10, 2018 at 12:05 pm (2 weeks ago)

    Lots of great info here! I keep trying to get my hubby into things like bitcoin, bet he doesn’t seem to understand it. I will have to send him this post!

    Reply
    • tracie45
      January 11, 2018 at 1:33 pm (1 week ago)

      Please feel free to share Courtney. I don’t think investing in cryptocurrency is for the faint of heart. It requires tons of research and a good complete understanding. I have not made the plunge yet and I can’t say for certain that I will. Thanks for reading and commenting!

      Reply
  8. Tami
    January 10, 2018 at 12:31 pm (2 weeks ago)

    This is all new to me. I sitting back to see how others use it. I don’t want to be the guinea pig.

    Reply
    • tracie45
      January 11, 2018 at 1:30 pm (1 week ago)

      Exactly Tami! I will wait to see how everything pans out before I venture off into cryptocurrency. Thanks for reading and commenting!

      Reply
  9. Dana
    January 12, 2018 at 9:56 am (1 week ago)

    It still just amazes me how fast we’ve gone from computers being a sort of novelty to necessary for everything.

    Reply
    • tracie45
      January 14, 2018 at 7:47 pm (7 days ago)

      Yes Dana, we sure have come a long way from computers being a novelty to now being a necessity. Thank you for reading and commenting.

      Reply
  10. Gary @ Super Saving Tips
    January 13, 2018 at 2:05 pm (1 week ago)

    I’ve heard of blockchain technology before and even read explanations of it, but your post is the clearest explanation I’ve come across. I’m not a technologically savvy person, but I can generally understand it, especially the idea of health records. Bitcoin isn’t something I’m interested in pursuing, but I do like the idea of blockchain technology and I’ll be interested in seeing how it will be applied in the future.

    Reply
    • tracie45
      January 14, 2018 at 7:46 pm (7 days ago)

      I am glad that you got a better understanding of blockchain Gary. I am still on the fence about Bitcoin, but I can’t wait to see what comes out of blockchain technology.

      Reply

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