Why should you learn about Blockchain? Because it is about to transform every trust-based interaction in our lives, from financial services to identity, from health care to our Internet of Things devices.
While you don’t need to know how it works to use it, having a basic knowledge of this technology shows why it’s considered revolutionary. It will also help you understand the news headlines, speak intelligently on the topic and make better investment decisions.
What is Blockchain?
Blockchain is a software technology/architecture that was originally devised for the digital currency, Bitcoin. The creator or group of people that invented it go by the pseudonym, Satoshi Nakomoto.
Blockchain technology allows digital information to be distributed but not copied. This makes an incorruptible digital ledger of transactions.
There are two major blockchains that we can say without hesitation are of global importance: the Bitcoin Blockchain and the Etherium Blockchain.
- Bitcoin is digital money. The Bitcoin blockchain stores and processes all past transactions since the start of its network. This ensures easy accounting and transfer of value (i.e. money).
- The Ethereum blockchain, apart from handling accounts and transactions, also stores programming logic. Ethereum is different from Bitcoin because with Ethereum you can not only transfer money (i.e. Ether), you can execute smart contracts.
Understand How It Works Blockchain was invented to record financial transactions used by Bitcoin. Follow the infographic below to understand how the technology works for a financial transaction.
The Best Analogy
A lot of experts have tried to explain Blockchain and I believe the Google Docs analogy is the most applicable. It comes from William Mougayar, Venture advisor, 4x entrepreneur, marketer, strategist and blockchain specialist. Keep in mind that this is only an analogy. You don’t need Blockchain to share Google documents.
The traditional way of sharing documents with collaboration is to send a Microsoft Word document to another recipient, and ask them to make revisions to it. The problem with that scenario is that you need to wait until receiving a return copy before you can see or make other changes because you are locked out of editing it until the other person is done with it. That’s how databases work today. Two owners can’t be messing with the same record at once.That’s how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again).With Google Docs (or Google Sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people.
Imagine the number of legal documents that should be used that way. Instead of passing them to each other, losing track of versions, and not being in sync with the other version, why can’t *all* business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow.You don’t need a blockchain to share documents, but the shared documents analogy is a powerful one
Blockchain Pros – Transparent and Incorruptible
The blockchain network lives in a state of consensus, one that automatically checks in with itself every ten minutes. A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens in ten-minute intervals. Each group of these transactions is referred to as a “block”. Two important properties result from this:
- Transparency data is embedded within the network as a whole, by definition it is public.
- It cannot be corrupted altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network.
Ian Khan, TEDX Speaker | Author | Technology Futurist said this:
As revolutionary as it sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism
Learning as much as you can about Blockchain will not only make you a hit at the office but it will also put you in a position to becoming a user, investor or developer.
Check in to these great resources on a regular basis to stay up-to-date on a technology that is going to transform our landscape.
In this podcast, host Laura Shin talks with industry pioneers across tech, financial services, health care, government and other sectors about how the blockchain and fintech will open up new opportunities for incumbents, startups and everyday people to interact more efficiently, directly and globally.
This beginners guide to Blockchain has a lot of great information and analogies to better understand the technology. It also features quotes from the industries best.
Roberto, Amirsan. “5 Reasons Why You Should Learn More about Blockchain.”YourStory.com, Yourstory, 28 Nov. 2017, yourstory.com/2017/11/5-reasons-learn-blockchain/.
Clayton Elliott @clay, et al. “What Is Blockchain Technology? A Step-by-Step Guide For Beginners.” Blockgeeks, 22 Dec. 2017, blockgeeks.com/guides/what-is-blockchain-technology/.