The blockchain, which powers cryptocurrencies like Bitcoin and Ethereum and other cryptocurrencies, has the potential to change the way people connect with one another online, dramatically reshaping the Internet. At its core, the blockchain allows people to share information without relying on a central authority or third party.
This can have huge implications on anything from how we do business to how we vote in elections. To understand why blockchain is important for everyone, let’s take a look at what it can offer us right now and what’s to come in the future.
What is blockchain?
The blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing as completed blocks are added to it with a new set of recordings. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the blockchain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
Crypto-currency enthusiasts think the blockchain is important because it brings trust, security, and transparency to the digital world. By design, the blockchain is resistant to modification of the data. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks — which requires the collusion of the network majority.
What does the blockchain do?
The blockchain is a digital ledger that is used to record transactions. This ledger is decentralized, which means that it is not controlled by any one person or organization. Instead, it is distributed across a network of computers. This makes the blockchain very secure. Transactions that are recorded on the blockchain cannot be changed or deleted. This makes the blockchain very transparent. Cryptocurrencies, such as Bitcoin, are built on the blockchain.
These currencies allow people to make fast and anonymous financial transactions without relying on traditional banks. Bitcoins can also be purchased at an exchange rate set by individual buyers and sellers without relying on a centralized institution to establish the price (ex: when you use your credit card).
These features make bitcoins perfect for certain situations like quick cross-border transfers and international remittances (e.g., sending money from the United States to someone in Europe). There are many other potential uses for blockchain technology too, including smart contracts, online voting systems, and even identity management systems for humans!
