The blockchain is , without a doubt ,the revolutionary invention of Satoshi Nakamoto, a genius or a group of geniuses.However since then, it has grown into something bigger and that is the reason why everyone has this particular question in mind: What is Blockchain?
Lets start from the beginning . The first major application of blockchain was bitcoin which was released in 2009. Bitcoin is a cryptocurrency and blockchain is the technology that powers it. A cryptocurrency refers to a digital coin that runs on a blockchain.
The bitcoin blockchain is decentralized which means that it is not monitored by any central authority. Normal currency like coins and notes are issued and controlled by banks . Bitcoin however is managed by a network of people known as miners.
One of the major advantages of blockchain is that it is “tamperproof”. Each new block that is added onto the chain carries a unique cryptographic reference which renders it impossible to be re-mined. In order to tamper with this, each earlier block (there might be millions of them) would have to be re-mined which is totally impossible.
Traditional methods of payment in the entire world are registered on private databases which are owned by corporate and state entities. In summary , every transaction requires a third party to intervene and confirm the transaction.
Because of this , those databases could be access or hit by a cyber-attack.Hence, they are more prone to fraud.
Blockchain , however is not centralized which means that even if one part of it went down, the whole network would not collapse.A global network of computers uses blockchain technology to jointly manage the database . As such , the database is rendered public and be access by anyone on the internet without corrupting it.
Because of the nature of blockchain, it will always be slower than centralized databases as nowadays the network has become more congested. What’s more:a blockchain transaction carries 3 additional burdens before adding the new block onto the chain.
Every transaction of the blockchain must be signed digitally by a cryptography scheme. By contrast , in centralized databases, once a connection has been established, the need to individually verify every condition that comes with it is null.
Blockchain computation requires more power than a normal centralized database transaction as in a blockchain transaction everything has to be processed individually by every node in the network. As a result it is much more work done for the same end result.
Blockchain offers tremendous savings in transaction costs and time but the high initial capital cost could be a deterrent.