Short Summary Overview
Blockchain technology, also referred to as distributed ledger technology, derives its strength from strong cryptography and hash functions. Blockchain technology was invented by the unknown inventor of the bitcoin cryptocurrency in 2008. Simply put, the bitcoin crypto-currency runs on the bitcoin blockchain. The Blockchain is a public blockchain where anyone can become a miner and details of every single bitcoin transaction are stored on each node. Then there are other blockchain platforms such as – bitshares, ethereum, hyperledger, multichain, ripple and stellar. Blockchains aims to minimise fraud and maximise efficiency, security & transparency in supply chains, healthcare, global money systems, financial technologies, democratic elections, auction of public assets, energy trading, electronic record authentication, delivery of Government services, IoT (Internet of Things) and more to come. Blockchain is likely to bring about a major transformation in the functioning of financial markets, collateral identification (land records for instance) and payment systems.
Understand the Blockchain in Two Minutes
What’s the connection between Bitcoins and blockchains?
A blockchain just sounds like a kind of database with built-in validation—which it is. However, the clever bit is that the ledger is not stored in a master location or managed by any particular body. Instead, it is said to be distributed, existing on multiple computers at the same time in such a way that anybody with an interest can maintain a copy of it.
The block validation system ensures that nobody can tamper with the records. Rather, old transactions are preserved forever and new transactions are added to the ledger irreversibly. Anyone on the network can check the ledger and see the same transaction history as everyone else.
Effectively a blockchain is a kind of independent, transparent, and permanent database coexisting in multiple locations and shared by a community. This is why it’s sometimes referred to as a mutual distributed ledger (MDL).
It took the simpler blockchain implementation within Bitcoin to turn things around. The permanence, security, and distributed nature of Bitcoin ensured it was a currency maintained by a growing community but controlled by absolutely nobody and unable to be manipulated.
Following the launch of Bitcoin, dozens of vigorous tech startups have vied with each other to produce the Next Big Thing in blockchain-based cryptocurrency, from the relatively-well-regarded platforms such as Ethereum to the more dodgy ones.
A notable drawback of blockchains is that their distributed nature demands constant computational power in many multiple locations, and all the on-going accumulated (electrical) power that entails.
The current increase and renewed interest in blockchains has its roots in the desire to cut transaction costs and banking fees and reducing the power of monopolies in the financial services industry.
The current resurgence in interest in blockchains, therefore, could be a sign that a reorientation is taking place in the financial technology investment arena, as those working in financial services and other sectors begin to recognize the practical benefits beyond the Bitcoin hype.
(Source: Alistair Dabbs is a London-based freelance technology journalist, author and columnist, specialising in digital imaging, responsive publishing). https://arstechnica.com/information-technology/2016/11/what-is-blockchain/