What You Need To Know About Blockchain Technology
The tech likely to have the greatest impact in the world has arrived and is not social media, the cloud, is not robotics or even artificial intelligence and you will be surprised to learn that is the core of the digital currencies being used on Bitcoin, Litecoin, Ethereum, and Ripple XRP to mention a few.
Digital Currencies
For the past decades, we have to know the internet of information, when you an email of a funny mean, I’m not actually sending you the original is actually sending you a copy of the image and email content. Like name indicated, Blockchain is a chain of blocks that contains data.
This technology was originally created in 1991 by a group of researched and was originally intended to time stamp digital documents so it was not possible to backdate them or to tamper with them. It went by mostly unused until Satoshi Nakamoto in 2009 to create the digital cryptocurrency, the Bitcoin network.
Blockchain is an open source distributed ledger, that has the interesting property that once data has been recorded inside a blockchain it becomes very difficult to change it.
How Does Blockchain work?
Each Block had the following 3 items in them: The Data, The Hash and The Hash on the previous block.
The Data
Depending on the type of blockchain will depend on the type of information it holds. Bitcoin blockchain, for example, Stores details about a transaction or contract. Details such as the sender, receiver and the number of tokens.
The Hash
The block uses a sequence of alphabetical characters to generate a unique fingerprint pertaining to that block’s content. As the block is created, it is simultaneously calculated. Making a change on the block will cause the Hash to change. This is a key component for this technology as making a change to the data inside the block will cause the hash to change it will no longer be the same block.
The hash of the previous block
This sequence effectively creates a chain of blocks and if this sequence what makes this technology so secure.
Proof of Work
This is a mechanism that slows down the creation of new blocks(Hash Rate), in bitcoins case it takes roughly about 12 minutes to create a proof of work and add a new block to the chain But that not all the security features of a blockchain.
Distributed Ledger
Blockchains use an open source peer to peer network of computers, opposed to a centralized location. Anyone is allowed to join. In the event someone new joins they get a full copy of the blockchain. Allowing the node to verify to ensure everything still in order and untampered with the decentralized application.
When someone creates a new block the Node verifies the block. This makes sure its hash hasn’t been tampered with. Once everything has been checked out each node will add it to its own blockchain. All the nodes on this blockchain create a consensus algorithm that agrees that all blocks are valid and rejecting the ones that arent, block that have been tampered with will be rejected by all the nodes in the network. For example, a bitcoin miner will have to validate the hash of a block with other miners and they all will have to share the identical hash for that same block.
Smart Contracts
This is where the world as we know it will change. Smart contracts are simple programs that store on the blockchain. They can be used to automatically exchange tokens/services based on their conditions.
This technology is being optimized to handle medical records, e-notary and even collecting taxes.
Cheaper Remittance
What is holding back prosperity on 3rd world countries is not corporate investment, telecommunications is not even natural disasters. Its Remittances, this is the global service that is getting wealthier by the second thanks to hard-working individuals in foreign countries sending money back home. The industry generates 600 Billion dollars a year and growing thanks to the hard working people. This is why blockchain technology is so important. The convenience to download an app on a cell phone like Abra or Coinbase and from there send $300 from the palm of their hand. The receiver will almost instantly receive the available funds by sending it via Bitcoin. These types of transactions take only minutes and costing only it paying only 2%.
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The main issue with the internet and online banking today is that we about have our entire lives online. Essentially leaving a digital bread crumbs trail behind of photos shared, emails we have sent, every payment we had made. All these crumbs of data are collected by services we currently cannot leave without like facebook, Instagram, email service provider and other well-known entities that have taken charge on creating a digital version of you and this virtual version of you now might know more about you that you do as it has digital proof of all you have done online and where have you been, You might not be able to remember a text that you sent last month or a photo you shared last year but your digital self does but the big problem is this virtual you is not own by you.
Currently using blockchain network a “black box” containing this virtual you are being developed but this is very stingy with amount and type of information is shared with others the advantage of this “Black Box” is that is own by you, only you have control of what and how much data you choose to share with others, for example when buying a car the seller doesn’t even need to know when you are, they just need to know they got the funds and the smart contract will take care of the rest, finally a real solution to the current danger we are living nowadays with the lack of online privacy.
