Intro to Blockchain

Blockchain technology is revolutionizing our world and it’s moving at a rapid pace — with changes and innovations happening daily.

You've probably heard about blockchain, but not quite sure what it is. Below are some basics and a high-level overview of its use cases.

Blockchain technology is a decentralized database that stores a registry of assets and transactions across a peer-to-peer network.

It’s basically a public registry of who owns what and who transacts what. And its applications go far beyond cryptocurrency and Bitcoin.

Quick Overview:

• A blockchain is a database that stores encrypted blocks of data then chains them together to form a chronological single-source-of-truth for the data.

• Digital assets are distributed instead of copied or transferred, creating an immutable record of an asset.

• The asset is decentralized, allowing full real-time access and transparency to the public. Note: since the data is encrypted by the sender, only the appropriate recipient can decrypt and view the data (please see my Keys to Cryptocurrency blog post to learn about symmetric and asymmetric cryptography).

• A transparent ledger of changes preserves the integrity of documents, which creates trust in the asset.

• Blockchain’s inherent security measures and public ledger make it a prime technology for almost every single sector.

You can think of the blockchain as an open infrastructure that stores many kinds of assets. It stores the history of custodianship, ownership, and location for assets like the digital currency Bitcoin and other digital assets like a title of ownership of intellectual property —i.e. Non-fungible tokens (NFTs) in the form of artwork, music, etc. An asset could also be a certificate, a contract, real world objects, and even personal identifiable information.

How Does it Work?

• Digital assets from money to music and everything in between are not stored in a central place, but are distributed across a global ledger, using the highest level of cryptography. In other words — in comparison to the structure you’re currently accustomed to where everything is stored in a central location (e.g. Google, Amazon cloud, etc.), data on the blockchain is stored on millions of computers “nodes” located around the world.

• When a transaction is conducted it’s posted globally across these millions of nodes (a node is a computer that is connected to the blockchain network and can be owned/operated by an individual person or a group/pool of “miners”).

• The “miners” who run these nodes compete with one another to come up with the correct nonce value through the mining algorithms. “Mining” is the act of adding valid blocks to the blockchain.

• The first miner to solve the equation and generate the correct nonce is rewarded in 6.25 Bitcoin (or any of the other cryptocurrencies that operate on a Proof-of-Work algorithm). If you’re interested in mining, here’s a link to the 17 Best Crypto to Mine in 2022.

• The block (which is linked to the previous block and the previous one before that to create a chain of blocks) is then verified by other miners. So, if someone wanted to hack a block and alter the data, they’d have to hack that block, plus all the preceding blocks (the entire history of commerce is on that blockchain and not just one central computer, but across millions of computers, simultaneously all using the highest level of encryption). So, it would be tough to hack.

How Blockchain Technology Impacts You

You're probably thinking, that's all well and good, but how does blockchain affect me? Here's a list of prominent blockchain applications that will one day require you to interact with the blockchain:

1. Secure sharing of medical data

2. NFT marketplaces (where digital artwork, music, photography, poetry, etc. are sold, bought, and traded)

3. Music royalties tracking

4. Cross-border payments

5. Real-time IoT operating systems

6. Personal identity security

7. Anti-money laundering tracking system

8. Supply chain and logistics monitoring

9. Voting mechanism

10. Advertising insights

11. Original content creation

12. Cryptocurrency exchange

13. Real estate processing platform