New to blockchain? This is what you first need to know about the blockchain technology without all the technical mumbo jumbo.
Ahh, blockchain… People have their own way in explaining blockchain to strangers they have just met. And over my past year doing roadshows and meeting new people who have not yet heard of the blockchain, this particular analogy has received the most compliments:
“Think of blockchain like a simple notebook where we keep track of things people give or take from each other. But instead of just one notebook, there are many copies of it all over the world and they all have the same information. This way, no one can change the information without everyone else knowing. It’s like anyone would be able to know if a transaction is valid by just referring to the notebook.”
Now, I know what you’re thinking. You’re probably asking what’s so special about this? And why do I want people to know about my transactions which are supposed to be private to myself? Relax, get a drink…we’ll get there eventually.
Let us first look at the fundamental characteristics of the blockchain:
- Transparency: Every transaction is recorded in a public ledger that is accessible to anyone on the network. This is useful in industries like finance, supply chain management, and voting systems where transparency and accountability is important.
- Immutability: Since transactions recorded on a blockchain needs to undergo a complex cryptographic calculation and simultaneously verified by everyone in the world, it is extremely time consuming and expensive to rewrite the history of a blockchain. The data stored on a blockchain is secure, permanent, and resistant to tampering.
- Efficiency: Traditional processes like banking and real estate transactions can be slow and expensive because they often involve intermediaries. Blockchain technology allows for peer-to-peer transactions, which can be faster and less expensive. Tell me, which bank do I call if I need to transfer $2 billion under 15 minutes, and paying less than $1 in fees?
- Decentralization: Blockchain removes controlling middlemen from our daily transactions. It allows anyone and everyone to participate in different transactions in a secure and transparent way.
In short, blockchain is a transparent, immutable, and decentralized database (notebook) that levels up transaction efficiency.
I hope you now have a simple understanding of what this technology is all about. We’ll dive deeper into the each of these fundamental characteristics and explore the various use cases of blockchain technology in future articles. Thank you for reading and kindly reach out if you have any questions or topics that you’d like us to cover!
*Disclaimer: Non of the things I have mentioned here can be taken as financial advice, I am just sharing my knowledge and perspectives on the crypto industry.
*Good-to-know: I hired ChatGPT as my editor where I provided my original thoughts and have it polish sentences and paragraphs. Proofread by yours truly.