Over the last few years, Bitcoin has received a lot of press. It is the cryptocurrency that everyone is talking about. However, Blockchain, the core technology behind Bitcoin, has started to gain its own following. A lot of companies are investing in blockchain as the next generation technology that can give them the competitive edge. Blockchain has captured the imagination of a lot of business leaders.
Mysterious Beginning of Bitcoin
In 2008, the journey of Bitcoin started with a whitepaper called “Bitcoin: A Peer-to-Peer Electronic Cash System” by Satoshi Nakamoto in a cryptography forum. The event was mysterious because nobody knew who the author of this scholarly paper was. Nakamoto continued to communicate with the community through electronic means and started to implement Bitcoin algorithms described in the whitepaper.
Within a year, the first open source implementation of Bitcoin was live, and the cryptocurrency race had started. Nakamoto continued to work on the Bitcoin software until 2010. After that, Nakamoto disappeared from the scene. Until this day nobody is sure who Satoshi Nakamoto was. Bitcoin continued to grow. Today Bitcoin (BTC) market cap is more than $100 billion.
Understanding The Blockchain
Bitcoin depends on blockchain technology. Blockchains are decentralized digital ledgers that use cryptography to ensure data integrity. Even though the mathematics behind blockchain is complicated, the idea is easy to understand.
Ledgers play a vital role in modern commerce. When two parties make a transaction, the information is recorded in a paper-based document or a database. In addition to the ledger, trusted third-parties are used in transactions to verify the authenticity of the transaction details. Banks and governments play the role of trusted third-parties today.
In blockchain technology, there is no need for third-party involvement. The issue of trust is taken care by mathematical calculations and cryptography. This make is attractive to consumers.
Each transaction record is treated as a block. Cryptography is used to embed this block into the blockchain. The cryptographic calculations require a lot of computational power. Anyone on the blockchain network who volunteers computational power is rewarded. In the case of Bitcoin, the volunteers are called miners and they get paid in Bitcoin. At the time of this article, Bitcoin has been climbing in value; and currently holding steady around the $7,200 USD. There’re other platforms for users to mine, but Bitcoin is the most popular among the mining populous.
Read Also: How Do Ethereum Smart Contracts Work?
Every new block added to the blockchain depends on all the previous blocks. As the chain becomes longer and longer, it becomes impossible for anyone to corrupt the chain. The computational power required to manipulate the blockchain becomes mathematically improbable. Mathematics will flag even a single bit of corruption. Also, everyone has a copy of the blockchain. As soon as someone finds out that they have a problematic copy, they can delete the blockchain and get a new authentic one from the network.
Uses of Blockchain Outside of Cryptocurrency
Blockchain technology removes the need for a trusted third-party. It opens up a lot of possibilities. Now two parties can make a transaction without worrying about fraud. The blockchain creates the trust. The two parties know that the record is immutable and everlasting. Different industries have already started to look into the possibility of using this technology. Here are a few:
- Financial Industry: The Financial industry is looking into blockchain to make transactions easier. If contracts move into the blockchains, the information will become more auditable.
- Healthcare Industry: Healthcare industry is looking ways to put patient information into blockchains to create data interoperability for pharmaceuticals, hospitals, doctors, and patients.
- Governments: Governments are looking at blockchain to store identification information of its citizens. The immutable nature of blockchain data can help governments manage citizen data more efficiently at a lower cost.
The Future of Blockchain
Blockchain opens up the possibility of trusted transactions and data storage without the need for third-party verification. So different industries are trying to use blockchain to improve their processes and procedures. The blockchain technology is being hailed as an innovation as important as electricity or the internet. It is working its way into every industry. It will continue to transform every aspect of modern life.