This is one of the most common questions I am asked when I talk to people about my newfound passion (Web3.0). I don’t blame them. It took me a while to get my head around this as well.
Let me try and explain in a simple way.
Blockchain is like a pizza base. Bitcoin is Pizza Margherita.
Blockchain is the underlying technology upon which the Bitcoin application is built.
Another example of the Blockchain implementation (say Pepperoni), that you may have heard about recently, are NFT’s. NFT = Non Fungible Tokens (a topic for another post).
So what is Blockchain and why am I so excited about it?
At its core, it is a “chain of blocks”. Each block holds a set of transactions between people or organisations. Here are the four cool things that I love about Blockchain:
- Once a block gets added to the chain, it cannot be modified (edited). This is immutability.
- A copy of this entire blockchain is available on most nodes that take part in a given network (ex: Bitcoin). This is distributed technology.
- Data in the blocks is encrypted through techniques that make it difficult for unauthorised access. This is through cryptography.
- No central authority is needed to authenticate the transactions. Its veracity lies in the fact that the network believed it to be a valid transaction. This is decentralisation.
Here is a more technical definition. “Blockchain is a distributed ledger technology that allows many parties to record transactions in a secure, verifiable, and permanent way without the need for a central authority.”
The outcome. A tamper-proof, permanent source of truth. The truth now resides in many nodes making it almost impossible to bring down “the system”.
The utility of such powerful underlying technology will redefine many sectors. This will have far-reaching implications for applications, business models and incumbent giants. Financial services seem to be the first cab of the rank. Next up is music & arts in general. The real fun will begin when enterprises start flexing their muscle in this space. It’s about time.
This article was originally posted on Author’s Medium Blog.