What is Blockchain?
No one truly knows where the Blockchain technology is going to take us. It’s still early days. But the fact that big names in the finance world, such as Nasdaq and Deutsche Banks, are already sniffing around it and doing a bit of experimenting should tell you that it’s probably going to take us somewhere.
Somewhere BIG.
But what actually is it?
The definition isn’t easy to pin down, with some people saying it’s this and others saying it’s that.
But essentially, the blockchain is a spreadsheet that can ultimately be accessed by anyone around the world at any time. It’s a decentralised database that, freed from one single authority, is more secure and more flexible than any we have used before.
It’s also Bitcoin’s biggest (and perhaps best) innovation yet.
How does it function?
Whenever a block is added to a new chain, every single piece of data from the previous transaction is still contained on that block.
As well as all the data from all the previous previous transactions.
When you add a block to a chain, a verifier (who is often rewarded in the form of Bitcoin for taking their time out to verify) checks and confirms the nodes and data to make sure that everything is correct and as it should be. This is basically checks and balances.
The information on a blockchain is stored in two different ways:
- Transactions
- Blocks
This means that there is SO MUCH info in a blockchain – info regarding all the various transactions that individuals have made, and are continuing to make.
And because the system is decentralised, the transfers and changes take place almost instantly. We don’t have to wait around for a single authority to verify everything.
However, a transaction doesn’t immediately become valid. It has to be digitally signed and verified first. Why? Because without this, the possibility for replica transactions is apparent.
Moreover, the blockchain works in such a way that each block contains data that ensures the whole chain can confirm every single transaction at any one time. As soon as a transaction is verified, new blocks are created, and the verifiers are rewarded with Bitcoin.
Reasons why you wouldn’t use Blockchain include …
The Blockchain technology isn’t perfect, and there are a few reasons why someone wouldn’t want to use it.
For example, Blockchain is quite costly. It’s not cheap to run.
But this can be spun in a positive way: Blockchain is REALLY secure, and it’s for this reason that it’s expensive to run.
Each node that we create costs exactly what it eats up in resources. And there is no distinction between nodes – they all pretty much cost the same. No nodes are “dirt cheap”.
Secondly, if you’re a marketer, you might be averse to Blockchain. Why? Because of something called scan data monitoring.
Essentially, targeted ads could (theoretically speaking) become a thing of the past if Blockchain enters mainstream. At the moment, marketers can target individuals quite easily by extracting knowledge about their buying habits. With Blockchain, this type of thing will become much more difficult – if not impossible.
Lastly, Blockchain is actually quite complicated!!
With Blockchain, anyone can run a small business. But you have to fully understand Blockchain technology first – which is by no means easy.
There is hope that by the time Blockchain finally enters the mainstream, it has been simplified for ease of use.
If you do decide to use Blockchain, watch out for these mistakes …
Some uses have rushed headfirst into using Blockchain and got burnt. To make sure this doesn’t happen to you, watch out for these common mistakes:
Don’t harbor expectations that are too high. Blockchain has been seriously hyped up, which has raised the expectations. But you need to level yours off a little.
Ask yourself why you’re using Blockchain and for what purpose. What are your goals? Don’t use it for the wrong reasons.
Also, it’s important that you have patience – and lots of it. Work at a deliberate pace, take your time. Cutting corners now means you will have to clear up the mess later on. Do everything by the book – draw up a schedule if you have to. Work on things bit by bit, and don’t miss any steps.
Also, it’s better that your blockchain remains private. By going public, you’re basically allowing anyone to see what you’ve got – including scrupulous individuals who have malignant goals.
If you’ve decided that Blockchain really is the best thing for you …
… you still need to do some experimenting.
Get a feel for blockchain before you really throw yourself into it. Remember that we master things through repetition, but we don’t know how useful something is going to be for us until we experiment with it first.
Blockchain has many uses – but is it useful for YOU?
Try a few things first, including:
- Reading data
- Writing data
- Altering Data
- Backing up Data
- Costs of Validation
The last one is especially important. If you don’t experiment with this, you won’t know how much it will cost you to validate your chain. To figure this out, you need to know the type/sort of data that will make up each block.
What can Blockchain be used for?
If you’ve decided that Blockchain indeed sounds like something that could be useful to you, here are a few things it can be used for:
Digital Identities – We all worry about digital security, but the Blockchain tech aims to reduce those worries by making it much easier to track and manage our digital identities.
Distributed Cloud Storage – Cloud store services all answer to a central authority at the moment. Wouldn’t it be great if we no longer had to put all our trust into one single storage provider?
Trading – Since Bitcoin’s are now being traded, it means that the Blockchain network has entered the heady world of trading.
The truth is that the future of Blockchain technology is exciting – even world governments are getting on board with it. It will enter the mainstream before long. You as an individual don’t want to be left trailing your rivals who have already mastered it – you want to be ahead of them. If you are sure that you want to get on board with Blockchain, now is the time to start.