The first cryptocurrency was released in 2009 as bitcoin, underpinned by blockchain technology as a peer-to-peer cash system that only exists electronically. Decentralized cryptocurrency has no single authority, but with over $100 billion US dollars’ worth of bitcoin in circulation, and a rapidly increasing number of use cases for blockchain beyond cryptocurrency, it’s a smart business move to understand and leverage this electronic financial system of the future.
Blockchain for Beginners
Traditional currencies are created and issued by either a government or central bank. Bitcoin’s blockchain technology is maintained by data miners with computers purposely built to solve the complex mathematics that is the basis of each transaction. To understand electronic currency, you should have a good grasp of the underlying technology that it runs on.
Here is a beginner’s guide to cryptocurrency and the blockchain technology explained.
What is Blockchain Technology?
A SHARED DATABASE
Blockchain is the technology that holds a digital ledger of financial transactions which exist virtually. Blockchain information is shared (but cannot be copied) as a financial database that is continually updated as transactions are conducted by private individuals or businesses. These financial records are public and can actually be accessed by anyone.
INCORRUPTIBLE FINANCIAL DATA
The beauty of blockchain is that it cannot be forged or faked. The financial database of transactions will continually refresh itself without outside interference. And since the information is not stored in a single location or on a single disk drive, the information cannot be hacked (in theory). This makes Blockchain technology extremely robust and durable.
No Single Point of Failure
Blockchain holds millions and millions of transactions and creates a block of financial information. The actual database of transactions is the chain which holds all these transactions – hence the term, blockchain. Millions of computers play host to the blockchain that keeps track of financial data – and every day more varied transactions are handled through Blockchain technology.
PRIVATE BLOCKCHAIN TRANSACTIONS
Each Blockchain transaction is assigned a unique and private key as proof of both the transaction and the owner. When a business or individual makes a Bitcoin transaction, the Blockchain holds the information in that person’s digital wallet (or purse) and secures it with a private, digital key.
REQUIRES MATHEMATICAL VALIDATION
Here is where the computing power of the world wide web comes into play, as each digital transaction is combined with others to create a block of financial data. Purpose-built computers apply mathematical formulas to the data, which is released as Bitcoin or other forms of cryptocurrency. When a block of data is resolved or validated, it is added to other blocks of information – creating a chain of financial data.
Advantages of Blockchain Technology Explained
Since Blockchain is not centralized, there is no censorship and the financial records are kept as a peer-to-peer operation, much like hiring a freelance worker to perform a private service. Since the information is accessible to the public, an inherent level of transparency is obtained.
Because all the individual transactions have a private key assigned, the information is secure. Only someone with access to the private key will know the financial details of the transaction. The electronic transactions eliminate all paperwork – none of the data exists physically, only digitally. And since there is no middleman conducting the transactions, Blockchain eliminates any third party overhead.
Choose Sequent Solutions to Leverage Your Blockchain Power
Contact Sequent Solutions to learn how your business can leverage the power of Blockchain technology and position your company to take advantage of the future in cryptocurrency.