“Your presentation was interesting, but I’m still not sure what blockchain is exactly… ” This a typical comment that presenters get after a presentation on Blockchain.
All of us are aware that blockchain technology is a hot subject. It’s a revolutionary subject that’s gaining traction.
That may be the crux of a lightning argument…
But now picture someone interrupting your show and asking, “Great presentation, but can you explain how it works in practice? “
Ok, let us attempt to clarify the original intent of blockchain.
On your machine, you (a “node”) have a transaction file (a “ledger”). On their machines, two public accountants (we’ll name them “miners”) have the same ledger (so it is “distributed”). When you complete a transaction, the machine sends an e-mail to each accountant informing them of the transaction.
One of the accountants wants to be the first to confirm that you can afford the trade. (And he earns his salary in “Bitcoins”). The first person to check and confirm the transaction presses “RESPOND TO ALL”. And then, he or she attaches his or her authentication technique to the transaction (the “proof-of-work”). If the other accountant approves, everyone’s file is modified…
Blockchain technology allows for this service.
Should it not be more complex than that?
Ok, just not at the conceptual stage. It becomes more difficult as you put it into action and attempt to extract meaning from it. The preceding example is clearly oversimplified for others, but it can serve as a starting point for others.
Trusted third parties mediate financial transactions in a conventional setting. If you ever send money overseas, you would need an agent, most likely a trust. The trade is not usually overnight. It will take up to three days, and the broker will charge a fee for its services, which may be an exchange rate transfer fee or another tax.
The initial blockchain technology is royalty-free. It can be used instead of standard intermediaries for Bitcoin digital currency transactions. The middleman is substituted by the ecosystem’s mutual authentication. It provides high traceability, stability, and pace.
In the preceding case (a “public blockchain”), there are many “nodes” on the network. They serve as both transaction executors and miners. Until being connected to a blockchain, transactions are aggregated into blocks.
Miners are compensated in Bitcoins for the sum of computing time taken to decide
a) whether the transaction is genuine and
b) the cryptographic key that should be connected to the block of transactions in the open ledger in the relevant place.
The greater the number of sales, the more Bitcoins are applied to the virtual currency supply. The “bonus” that miners receive decline every four years before the Bitcoin supply stops – though this is not expected to happen until 2140!. Although the blockchain was designed to operate for Bitcoins, it can also be used with other virtual currency such as Ether.
Why do I need to inquire about blockchain technology?
Because of three factors:
- Blockchain technology is not permanently restricted to the public domain. It may be used internally, with nodes acting as nodes on a private network. And the blockchain acting as a public ledger. Financial companies, in particular, are under tremendous strain to demonstrate regulatory enforcement. Many are ahead of the curve in integrating blockchain. Blockchain-based secure technologies can hold the key to lowering enforcement costs.
- Blockchain technology isn’t all about banking. It can be used with any multi-step transaction that necessitates traceability and visibility. Blockchain may be used to administer and sign contracts and validate the provenance of goods in the supply chain, in particular. It may also be used as a voting forum, to handle names and deeds, and for a variety of other items. When the digital and tangible realms merge, blockchain’s technological implementations can expand.
- The fusion of public and private blockchains forms an environment in which companies, consumers, and suppliers collaborate in a stable, traceable, and virtual way to drive blockchain’s exponential and innovative development.