Blockchain 101

May 4

What is Blockchain?

Welcome to our Blockchain 101 series! Blockchain technology is becoming increasingly popular, and it's important to understand what it is and how it works. Simply put, Blockchains are blocks that are chained together. Think of it as a suite of distributed ledger technologies that can be programmed to record and track anything of value, be it financial transactions, medical records, land titles, and more.

So - Why use Blockchain?

One might argue that since the days of early arithmatic, we can already record and track things of value, so what is the fuss about blockchain? You wouldn’t be wrong to wonder about this, it’s a logical thought!

Here are some key reasons that make Blockchain stand out among other technologies.

The way it tracks and stores data: Blockchain stores information in batches called blocks linked together in chronological order to form a continuous line (a chain of blocks). If you make a change to the information recorded in a particular block, you don't rewrite it, instead, the change is stored in a new block, showing that x changed y at a particular date and time. Non-destructively, it tracks data changes over time. Given that it is decentralized and distributed across a large network of computers, this reduces the ability for data tampering.

Creating trust in the data: Before a block can be added to the chain, a cryptographic puzzle must be solved, thus creating the block. The computer that solves the puzzle shares the solution with all the other computers on the network. The network verifies this solution, and if correct, the block will be added to the chain. This step ensures that we can trust each and every block on the chain since the network does the trust-building for us.

Another reason why Blockchain technology is gaining popularity is its ability to enable digital currency as a financial tool, you may have heard the term “crypto” gain popularity in recent years. Crypto, short for Cryptocurrency, like Bitcoin, is a digital or virtual form of currency that uses encryption techniques to regulate the generation of units of currency and verify the transfer of funds. With blockchain, it is possible to create a decentralized, secure, and transparent network that enables the use of cryptocurrency as a means of exchange. This has the potential to revolutionize the financial industry, for example - removing the need for intermediaries like banks and enabling faster, cheaper, and more secure transactions.

No more intermediaries: One of the biggest advantages of blockchain technology is the elimination of intermediaries. For example, if Mr. Akin wanted to carry out a transaction with Mr. Lekan on the Internet, he would typically need to involve a middleman, such as a bank or a lawyer, to facilitate the transaction. This process can be costly and time-consuming, and there is always the risk that the middleman could make a mistake or act in bad faith. However, with blockchain technology, we can trust the blocks on the network and carry out transactions in a cost-effective and time-efficient manner. This brings us to Smart Contracts, which we'll cover in the next article in our series.

In summary, blockchain technology offers a secure and trustworthy way to track and store valuable information. It eliminates the need for intermediaries, reduces the risk of data tampering, and creates a system that we can all trust.

Further Reading: