What is a blockchain?
A blockchain is a type of database, a collection of digital information. The difference with traditional databases is that the blockchain stores records in a decentralized manner through blocks that are chained together. These records are then stored in a public ledger and are linked together using cryptography. This creates an immutable trustless database, perfect for storing financial transactions. It’s this technology that drives Bitcoin and most other cryptocurrencies.
How does a blockchain work?
Every computer in a blockchain network has a complete record of all the data that has been stored on the blockchain since its inception. A computer linked to the blockchain network is called a node and every node has the exact same copy of the full blockchain history. For example the blockchain of Bitcoin contains the entire history of all Bitcoin transactions and every node contains a copy of this history.
This means that when a node contains an error, or when a single piece of information differs from all other nodes, it can correct itself. No one can alter any information stored on the blockchain, the discrepancy would immediately be noticed. If you wanted to change something, you would have to alter the majority of the blockchain copies stored on thousands of nodes. It makes blockchains basically tamper-free.
It’s also why blockchain technology is considered ideal for finance. The decentralized manner makes transactions immutable. An altered blockchain is automatically rejected from the network. Most blockchains are also transparent, meaning anyone can check the entire history of all transactions ever executed on the network. This creates a trustless system where you no longer need to trust intermediaries such as banks with your finances solely on blind faith.
What are blockchains used for?
While blockchain technology is ideal for finance, it can be used to store many other types of data as well. In fact, blockchains are already used in many other types of businesses.
For example; an increasing number of large companies have in recent years begun to use blockchain for supply chain management. Through the use of blockchain technology, food can be tracked throughout the whole supply chain. This lets consumers easily verify food labels and makes it much easier for companies to trace bottlenecks or the origin of any diseases. It’s also used in the supply chain of raw materials to avoid things like child labor, a common problem in this sector.
Another example is the healthcare sector. Blockchains can be used to securely store patients’ medical records. These records are then immutable. You can even make it so that only the patients themselves would be able to access their records and they themselves get to choose who else gets access, such as their physician. This data would also be accessible wherever and whenever without sacrificing privacy.
A third example would be voting. Elections can be made more accessible through blockchain technology, boosting voter turnout, while reducing the potential for fraud with a tamper-proof system. Election results would also become transparent and practically instant.
Those are just a few examples outside the world of finance. Within finance the potential is enormous. Banking services can be much improved because transactions are much quicker, cheaper and not stuck to business hours. Fraud, theft and other financial crimes would be reduced because stolen and laundered money can be tracked much easier on the blockchain.
What blockchains are out there?
Blockchain is a relatively new technology and very frequently new ones are launched. Many blockchains compete with each other, while others are finding ways to co-exist. While companies like IBM are running their own blockchain for things like supply chain management, most blockchains are specifically made for cryptocurrencies.
While Satoshi Nakamoto didn’t invent blockchain technology himself, he was the first to give it a real-world application with Bitcoin. Created in 2008 and launched in 2009, the Bitcoin network has been growing rapidly ever since and it’s still by far the biggest blockchain in the world. It is also perhaps still the most decentralized blockchain out there.
In 2015 launched perhaps Bitcoins biggest competitor: Ethereum. Ethereum was created by Vitalik Buterin who wanted to introduce smart contracts on Bitcoin. Through the use of smart contracts many more functionalities have been opened up on blockchains, previously impossible on Bitcoin. Ethereum has opened the doors for a wave of new technological advancements such as decentralized finance (DeFi) and non-fungible tokens (NFT).
Even Ethereum is now getting its own competitors. Blockchain networks such as Cardano, Solana and VeChain are growing rapidly too.
What are the advantages of blockchain?
Blockchain transactions are approved by thousands of nodes which reduces human error significantly. It results in much more accurate records of information. Even if someone makes a mistake, the difference would immediately be caught by the thousands of other nodes. It makes blockchain networks much less prone to errors and much more difficult to tamper with.
Blockchains are also much faster than traditional systems. Transactions on the blockchain do not need to go through a central authority that can take up to days to settle. They’re also not bound to business hours. Blockchains run 24 hours a day, seven days a week and 365 days a year. Transactions can be settled on the blockchain within mere minutes. Transactions are also much cheaper on the blockchain. There is no longer a need for all sorts of intermediaries, which means transaction fees can be reduced significantly.
Last but not least, blockchains are also much more secure. Once a transaction has been recorded, the blockchain must verify its authenticity and it is then stored on thousands of nodes. It makes the records on the digital ledger immutable. The data is also transparent and anyone can verify its authenticity. That means that any stolen cryptocurrencies can be tracked throughout the public ledger, reducing theft, fraud, money laundering and other financial crimes.
What is the future of blockchain?
Blockchain technology was first proposed by cryptographer David Chaum in 1982, and subsequently by Stuart Haber and W. Scitt Stornetta in 1991. Yet only since Satoshi Nakamoto’s Bitcoin has blockchain technology finally been conceptualized into a real application. Since the inception of Bitcoin, the adoption of blockchain technology has grown rapidly and the future promises many great things for this industry.
Blockchains have faced much scrutiny over the years, yet more and more businesses are adopting the technology than ever – and at a fast pace. The application of blockchain technology can make many business operations faster, cheaper, more efficient and more secure.That means more companies than ever are now looking to hire blockchain developers. Blockchain4Talent offers a wide variety of open vacancies for blockchain developer jobs, marketing jobs and many more.