What is blockchain technology? Is it a fintech product, economic disrupter, the deathblow to the financial institutes an internet within the internet or just a technology behind the cryptocurrencies like bitcoin.
Blockchain technology has not remained an enigma anymore particularly due to the hype around the rise and fall of bitcoin market value. But the world still owes an explanation to the astonishment of a layman who is flabbergasted by the news of how bitcoin and other cryptocurrencies are making people rich overnight. An ordinary person needs to know what is blockchain technology which is posing a threat to the existence of banking system and which is likely to change the way world’s economy works.
What is Blockchain Technology? A Simple Explanation
Let’s try to understand the blockchain technology which is one of the major tech trends of 2018.
A Decentralized Database
You can consider blockchain technology as a simple database that keeps a record of all the transactions and contracts, without involving any intermediary like the bank that too in a decentralized way.
An Internet Within Internet
Now just think blockchain technology as an internet or a network of connected computers called as nodes. In the simple words when a user on a network makes a transaction it is recorded through the complex code in the form of a block, upon confirmation by another computer in the network. After this, the same block becomes replicated on all the computers or nodes connected to the network making a blockchain. In this way, every single transaction is recorded on all the computers. Let’s say if one million computers are part of a blockchain network then there will be one million records of the same transaction. And, who will have a system powerful enough to hack those one million computers?
A Disruptor for the Banks
One common answer to what is blockchain technology is that it is a fintech which is likely to disrupt the financial systems. Well, this prediction or perception does have a sound basis, because blockchain technology eliminates the need for an intermediary, like a bank, for conducting the financial transactions. The fact elaborates itself well in the title of the whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System” that a person or a group of persons named as Satoshi Nakamoto released to introduce the concept of the blockchain. The title describes the technology as a way of conducting peer-to-peer electronic cash transactions without involving any third parties.
Even in the modern times, individuals cant conduct direct financial transactions without involving the banks due to trust and security reasons. The blockchain gives them an edge to do so, along with replicating the record of their transactions on several computers so that no one can hack it.
It Ensures Anonymity
Another attractive but controversial aspect of blockchain technology is that users can conduct the transactions through it, by ensuring their anonymity. While this feature keeps the privacy intact, it is controversial for allowing money launderers an edge to pursue the illegal transactions.
An Ideal System for Finalizing Contracts
Bitcoin or any cryptocurrency which supports the financial transaction is not the only answer to what is blockchain technology; in fact, it has diverse applications. One common function of this technology is to act as a platform for finalizing the contracts; the best example of its Ethereum, a cryptocurrency that provides a platform for contracts. In the modern tech-dominated area businesses operating in digital space need to sign various online contracts. For this purpose, they need the safety mechanism which is impervious to fraud. Therefore, blockchain technology for its ability to replicate the transactions proves to be an ideal system for hosting various contracts.
A Facilitator in E-Commerce
There are several blockchain development skills to master, keeping in view the diverse applications of this technology. Content ownership rights are a major concern for the owners of online businesses. Vloggers, bloggers and Podcast hosts need to leverage this technology for fighting with piracy and making their content copyrighted. Blockchain technology which allows conducting of peer-to-peer transactions and supports the diverse kind of contracts to ensure transparency that too in a safe manner emerges as the major facilitator of E-commerce.
An Economic Disruptor
Most of the technological innovations prove to be an economic disruptor. But it is not even a debate anymore, particularly when the tech analysts are heralding the happening of singularity. The human conscious is on brink of becoming mechanized through artificial superintelligence. Given that, the question that blockchain will diminish many jobs doesn’t hold a value. And the common argument against such threats is that blockchain will also merely shift the direction of work. Of course, it will take time for the workforce to understand the new technology.
Becoming Rich through Blockchain
Let’s admit that many of you want to know what is blockchain technology in the pursuit of becoming rich overnight; this is what the rapid popularity of cryptocurrencies is making us believe. On a factual point blockchain indeed has the potential for making people rich. The technology has potential to increase its products which are various currencies like bitcoin, litecoin, etherum and many others. More people will use this technology, more cryptocurrencies will be mined resulting in an increase in the value of the market.