The Blockchain is going to change our lives forever, not to mention, many businesses and services across numerous industries. Governments are embracing the Blockchain with Dubai being one of the global leaders in the technology with their vision of having all government services on the Blockchain by 2020.
Many in the world are embracing the new digital economy… soon you will be transacting on the blockchain without even knowing it. So what is the Blockchain… 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 distributed database
Picture a spreadsheet that is duplicated thousands of times across a network of computers.
Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.
Information held on a blockchain exists as a shared and continually reconciled database
This is a way of using the network that has obvious benefits:-
- The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable
- No centralized version of this information exists for a hacker to corrupt
- Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet
A blockchain can also be implemented as a private network
The Blockchain is Durable and Robust
Blockchain technology is like the internet in that it has a built-in robustness by storing blocks of information that are identical across its network, the blockchain:-
- Cannot be controlled by any single entity
- Has no single point of failure
The blockchain network lives in a state of consensus, one that automatically checks in with itself every ten minutes or however long the time between blocks per cryptocurrency, for example, Bitcoin blocks are confirmed every ten minutes while EOT blocks are confirmed every ninty seconds.
A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens in various intervals.
Each group of these transactions is referred to as a “block”.
The Blockchain is Transparent and Incorruptible
Two important properties result from this:
- Transparency – data is embedded within the network as a whole, by definition it is public
- It cannot be corrupted – altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network
The Blockchain has a Network of Nodes
A network of so-called computing “nodes” make up the blockchain.
What is a Node
A computer connected to the blockchain network using a client that performs the task of validating and relaying transactions – the computer/miner a copy of the blockchain, which gets downloaded automatically upon joining the blockchain network.
The Blockchain has Enhanced Security
By storing data across its network, the blockchain eliminates the risks that come with data being held centrally
Its network lacks centralized points of vulnerability that computer hackers can exploit
Today’s internet has security problems that are familiar to everyone
We all rely on the “username/password” system to protect our identity and assets online. Blockchain security methods use encryption technology. The basis for this is the so-called public and private “keys”.
All the information on the blockchain is stored in files which are encrypted, in the world of cryptocurrency, these files are known as wallets.
Every file/wallet has an identifying address on the blockchain called its public key. This key is known and is public information and found on a blockchain explorer where transactions can be tracked. These transactions are somewhat anonymous as there isn’t a name attached to the transaction, only a wallet address.
There is, however, a second key which is called the private key which is only known to the user/owner of that specific EOT Wallet. To send a transaction from a wallet, the owner of that Wallet needs to sign the transaction with a private key. Once the transaction is signed by the valid owner it is recorded.
In the case above, the ownership of the wallet has been verified by the private key but what stops the owner sending a false transaction.
Thus we need a verification process, this is called mining.
Watch the Bitcoin transactions in real time on the BLOCKCHAIN explorer
The video below gives a short overview on how the blockchain works
Get your copy of What is Bitcoin
This e-book on Amazon explains what Bitcoin is, it explains that Bitcoin (BTC) is a virtual currency, digital, not physical, and independent of banks. Useful links and resources for the newbie and advanced Bitcoiner or cryptocurrency enthusiast.
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