What is this Blockchain that is currently making buzzes in the world? What does it entail? Why is everyone talking about? Is it worth my investment? Probably, these are among the plethora of questions that you’ve been asking yourself, and perhaps you’ve failed to find enough information to answer all your questions. Don’t worry; I got you.
I will use Bitcoin, one of the most common cryptocurrencies and relate it to Blockchain, the technology underpinning it to explain how Blockchains works and how its technology is bound to change the world.
Bitcoins are simply a digital coin running on a Blockchain, and they were first invented in 2009 by a person or a group of people whose identity remains a mystery. They (speculation) were commonly referred to as Satoshi Nakamoto.
Seemingly, nobody still knows their real identity up to date, and in 2009 they laid out their visions clearly in a whitepaper where they sought to see Bitcoins becoming one of the best peer-to-peer electronic money systems.
Bitcoin (BTC) Blockchain
The Blockchain technology behind Bitcoins is currently a public ledger recording every transaction that takes place between two or more people. Its advocates argued that when every transaction was recorded promptly, it would be more secure and wouldn’t be compromised like some of the current payment systems.
The first Bitcoin transaction dates back in 2010 by a renowned programmer, Laszlo Hanyez who cashed out close to 10,000 Bitcoins on two pizza inns belonging to Papa John’s. After this, the use of Bitcoins advanced and people started using it for different purposes including purchasing illegal stuff such as drugs and weapons.
How Bitcoin Blockchain Works
Unlike most of the common currencies that are centralized, Bitcoins are a complete opposite. They’re not governed by any central authority meaning that traditional financial institutions like banks have zero control over them. Instead, they’re maintained and controlled by a network of trained professionals referred to as miners.
Also known as nodes, these miners carry out their operations on high tech computers and each of them competes against each other to solve complex calculations in the sites for every transaction to be successful.
Each transaction comes from an e-wallet that has sort of a private key. This ‘private key’ is more of a digital signature that provides proof (mathematically) that the original owner of the e-wallet acknowledged the transactions.
Let’s say that there are millions of bitcoin transactions that are taking place in the world, each one of them is organized into a block which is governed by top-level cryptographic rules and regulations.
These blocks are later referred to professionals with high powered machines who use them to validate the transactions further by resolving the complex mathematical calculations. The emergent winners are paid in the form of Bitcoins. It’s that simple.
Do other Kinds of Blockchains Exist?
Here’s some good news; more companies are investing in the Blockchain technology to assist firms and individuals that have the same interest as theirs. Examples of such companies include Ripple, IBM, Hyperledger, and Ethereum.
Talking about Ripple, it is specially designed for both Regional and International transactions. It often involves transactions among big firms or investments companies that either love to cut down the costs of transactions across borders or that require their funds faster. The cryptocurrency attached to it is known as XRP, and despite being developed, it still isn’t that essential to power its products.
On the other hand, Ethereum has a digital currency known as Esther and is currently the leading cryptocurrency after Bitcoins. It went public like Bitcoins and now allows different clients to develop decentralized applications on their platform just like other renown companies like Apple and Microsoft.
Is the Future Bright or Dim for Blockchain?
We can’t deny that Blockchain technology may be the next big thing in the world and it might change the manner in which transactions are handled. It is bound to dominate in most of the government agencies, Insurance Companies or even in the health sectors.
Though promising, it’s unfortunate that it has numerous stumbling blocks that are still dragging its development. This is why it tends to be prevalent in minor processes like issuance of loans, that is, in the case of BBVA and other financial institutions that have acknowledged the technology.
Moreover, it’s still uncertain whether Blockchains Technology will have the capacity to handle huge financial transactions and this is what is now troubling most firms and investors.
Garrick Hileman, the CEO of Mosaic.io dispelled his fears when he said that the technology that Blockchain banks will be based on hadn’t been fully explored and it still needs more time.” This is still a source of confusion, and we must debate about it,” says Hileman.
Furthermore, with more companies investing in Blockchains, there is still doubt whether all of them will come up with a new digital currency that will make them compatible with each other. This current situation in the Blockchain technology can be compared to the golden days when mobile phones were first introduced.
In such times, there were numerous systems including Blackberry (the most lucrative system at that time), Android, and iOS among others. Tables turned; iOS and Android survived and up to date, they’re the ones that are currently dominating the entire market.
We all know that Blockchains is a hot, disruptive and accelerating topic at the moment. Things might get better when both the private and public companies collaborate to make this technology widely accepted.
This will only be possible if they resort to fill the void that still exists. Though it is still being experimented, we can’t wait to see it change the world and make it a better place. I believe that the rules are bound to change soon, do you?
Opinions in this article are that of the author, they do not have anything to do with Today’s Gazette.