Blockchain in Summary
Blockchain in a Short Summary
This is a low level view of the Blockchain.
Bitcoin has gained traction over the past couple of years and in 2017 finally took off and nearly touched $20,000 in value. You may be thinking why does this type of currency have any value and why is it worth so much? Originally when Bitcoin first came into the development space transactions were extremely fast, reliable, and absolutely anonymous. These are all major selling points for what we call a privacy coin in the crypto space. What makes Bitcoin unique is the underlying technology which is called the Blockchain. The question then becomes what the hell is Blockchain and what does it offer that other technologies do not?
A Blockchain is a self regulating ledger service that keeps a record of all the transactions that are occurring upon the Blockchain. The Blockchain is not a single service but it consists of various developers who are developing seperate services that mimic, improve, or innovate upon the original idea of the Blockchain. The problem that Blockchain is solving is that when you try to move any type of currency around a city it can take several days or even weeks just to move them around. In a Blockchain ecosystem it can take from milliseconds to an hour to move any amount of money across the globe. The Blockchain is a type of system which more often than not is decentralized. Decentralized means that not just one person has a copy of the Blockchain and any average joe can get a copy and begin verifying transactions for the masses. Which means that if anyone can get a copy of the Blockchain ledger and run the software to verify the transactions.
Another important layer on top of the Blockchain is the inability for the Blockchain to be modified by potential hackers in the future. A block inside of the blockchain consists of several transactions over the course of a few seconds to minutes and maybe even hours. When a block is added to a Blockchain there is an encrypted signature attached to the head of this Block. This encrypted signature consists of the previous blocks head signature and the data inside of the block as well other complex algorithms. When you encrypt a set of data in SHA-256 (an encryption method) changing a single letter, number, or variable will completely change the encrypted signature generated. This is why changing Blockchain data in the past is nearly impossible for hackers.
Yet you may think that nothing is unhackable there has to be a way! Well consider that in order to actually disrupt a Blockchain you must change everyone else's copy of the ledger which consists of millions of transactions, you also have to determine who owns a copy of the ledger, and you must also change them all while new transactions are being added and confirmed every second. Sounds like quite the feat if any hacker can get their hands on that. On top of that no computing power in existence can even crack the complex algorithms and signatures being generated by our current generation of computers.
If that does not make any sense then the best way I can put it is that changing a Blockchain ledger is so difficult that we don’t have enough computing power or resources to make it happen. Which means that if nobody can manage the ledger but the massive amount of people who are running the network, then why do we need banks?