If you have ever wondered what is blockchain and how it applies to businesses make sure you read our article and find out more what’s behind the buzz. Basically, we can explain it as a distributed ledger that offers an immutable record of your transactions.  Read more below.

What blockchain represents can simply be defined as an online register of transactions such as:

• Money
• Goods movement
• Information exchange

In this article, we discuss more this and what can we achieve by using blockchains.

More in-depth about blockchain

If we want to expand the simple definition of blockchain given above we would say that it is a rising number of registers or files combined together in form of a block and this binding is possible due to cryptography.

This basically means blockchain is a manner of keeping registers but there is lots more here. Let’s check first how this process of record-keeping is made possible. This is also known as DLT which stands for the leger system that is distributed.

In this type of system, the register for each transaction is kept simultaneously at a number of places. The outcome is that when there are changes in the blockchain the entire network is informed and in order for the changes to occur they all have to agree.

What this means in the context of hacking and altering registers is that this would be really difficult because that person or organization would have to alter each register simultaneously. If you are interested in this, make sure you check our article on how to hack blockchains.

A blockchain is a rising number of files combined together in the form of a block and this binding is possible due to cryptography.

What is so exciting about blockchain?

The exciting thing about blockchain is based on a number of reasons.

As opposed to the Internet, Blockchain is decentralized. Simply put, most of the web pages that you open on a daily basis such as Google, Netflix and related store the information in databases. They all function on centralized systems.

What this means for blockchain is that it does not store data in a single place but the information are alive on the net. And if you a puzzled below is the answer why this is a good thing.

Challenges of the centralized systems

At the moment with the centralized systems we face a list of challenges.

Reliability – If the database kept by a centralized system is hacked then at the same time all the info will be exposed. Nowadays we have been witnesses to frequent such happenings.

Expense – The building of these types of systems is time and cost consuming as it requires a lot of capacity for smooth operation of the system.

Your information – Bear in mind that all the info that you give to the companies are not owned by you but the networks, which monetize this data.

Clarity – The use of the information, who uses the data and what for, are all topics that are never totally clear to all of us. This all can be changed by the Internet that is decentralized.

Is this the first decentralized system?

Surely, the answer to the question is negative. Such examples are Limewire and Napster.

One of the major defects of these systems were their inability to prevent file duplicating. Thus the issue that arose was double costs. The problem with the double-spending is trying to prevent people to spend money or use assets two times on two various items.

In centralized systems this issue is solved by verifying with the database whether the assets are used multiple times or spent. In decentralized systems like blockchain there is no such database so they solve the matter without it.

The invention – Blockchain

The blockchain concept appeared as early as 90s but the person who made it what it is today is called Satoshi Nakamoto. The famous bitcoin is based on blockchain.

Blockchain is based on cryptography and represents an online register of transactions. The cryptocurrencies such as Bitcoin are based on blockchain and can be exploited for recording financial operations, the transfer of services and goods and last but not least information exchange.

Other special features

Nowadays when we want to purchase goods or services we are often untrustworthy and check if the traders are reliable and secure. This is not the case with the blockchain as it enables exchanging services with no need for middlemen.

The majority of the networks are managed by third parties that act as middlemen and may charge you for each exchange of information. As there are no middlemen, in this case, there are fewer costs and quicker transactions.

Transparency. Bitcoin enables transparency in transaction performance and tracking.

As a type of decentralized system Blockchain has no single entity that deals with the system and acts as a controlling unit but if you want to change something this is done by reaching consensus.

What can blockchain be used for?

Power – Providing energy from one person who does not need it to another who does

Supplies – Registers various shipments with clearlity. The records can be passed across various handlers.

Marketplaces for open data – Platforms with open sources can exchange information anonymously. The information is to internet business what blood is to the body.

Governing bodies – The technology of Blockchain technology is used to make the services of the public sector faster and more transparent.

Audit & Regulations – It is not a typical application of the blockchain but it can also be used for surveillance and monitoring of the public transactions. This assists in quicker and more accessible regulatory roles.

Insurance – It assists in transparency in the field of insurance with established regulations for payouts.

The Internet Of Things – To connect computing devices within IoT and the economy of sharing.

What to expect

The beginning of Blockchain was Bitcoin but as it is expanding fast there are no borders so we would have to wait and see what the future will bring. Ethereum as a project has applied the blockchain principles and gave it to its new guidelines.