What is Blockchain Technology?

A SIMPLE GUIDE TO BLOCKCHAIN TECHNOLOGY

When the conversation turns to blockchain technology, do the words you hear resemble "Blah, blah, blah," like when an adult speaks in the Peanuts comic strip? Trust us; the momentary panic is not necessary. We're not here to say you need to understand all the ins and outs of how blockchain technology works, but if you ever want to buy, sell, or invest in cryptocurrency or grasp how the future internet might work, pull up a chair and listen for a spell. 

We'll keep it understandable and with a minimum of technobabble. But before we talk about the technology that might be the most astounding advancement since the internet itself, let's examine the old way of doing things.

DATABASES: DISTRIBUTED VS CENTRALIZED

Database. It's another of those words that make non-techies curl into the fetal position on the floor. The reality is that we're surrounded by databases. Let's define a database as a collection of information that has been organized for ease of access, management, and updating. An Excel spreadsheet and Access file are both databases. Your checking account down at the local bank sits in a database. In fact, it's hard to go far online without running into a website powered by a database of some sort.

Where blockchain turns technology on its head is by changing the nature of databases as we have known them. 

Let's take your checking account as an example. The database that contains all the bank's customers sits on a server and network that is housed in a central location. In other words, backups notwithstanding, there is a single working copy of the database that bank employees access throughout the day. If you do online banking, you're accessing the database directly through your computer or mobile device

In simple terms, blockchain technology operates by instantaneously creating hundreds, thousands, or even millions of copies of a single database and pushing that copy out to nodes (computers) on a network. Thus we have a distributed database rather than a centralized one. Got it? 

If you understand this single idea, you're on your way to grasping why a distributed model is so much better. In a word, security.


IT'S A HACKERS' WORLD, AND WE JUST LIVE IN IT

Every week it seems, millions of personal records are compromised by various means of cyber intrusion. Before you know it, your personal data including Social Security number, credit card accounts, and maybe even banking logins are for sale to the highest bidder on the Dark Web. 

You might not realize it, but only about 4 percent of the internet is indexed by search engines for public consumption. The rest of it is the breeding ground for all kinds of illicit commerce from weapons sales to child pornography too, you guessed it, your personal information. 

THE BIRTH OF THE BLOCKCHAIN

When Satoshi Nakamoto (a pseudonym for either an individual or group of people) created Bitcoin, the first cryptocurrency, it was built on top of the idea of a distributed database called the blockchain. If you want a straightforward blockchain definition, here's one: 

A decentralised, distributed digital ledger that records transactions across many computers. The blockchain's nature prevents it from being retroactively altered without changing all the blocks in the chain, which would require the collusion of the entire network. 

When considering the advantages of blockchain technology, here are two important factors to note:

#1. The blockchain cannot be controlled by any single entity. To return to our traditional bank example, if a hacker manages to penetrate the database, he or she has access to every customer's information. Not so with the blockchain. You can't simply hack one copy of the ledger in a distributed database because it self-corrects every ten minutes. Instead, you would have to be able to hack all of them simultaneously.

#2. The blockchain has no single point of failure. Even if one node were to fail or be compromised, the ledger in question is still replicated in its entirety, perhaps on thousands of other computers. In traditional systems, unless you have backups, a corrupted database is a big problem.

About Altcoin Sidekick:

Altcoinsidekick.com is your inside guide to cryptocurrencies and all thing blockchain.

 

Source: https://www.altcoinsidekick.com/

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