As the price of Bitcoin continues to reach new highs we thought we’d write a short post to explain in simple terms the ‘Blockchain’ technology behind Bitcoin and many other Crypto’s.
Blockchain Explained
A Blockchain is a public distributed ledger which records transactions between parties. The transactions are secure, verified and cannot be copied.
A Blockchain is decentralised, which means there is no central authority or third party involved. By being decentralised the Blockchain eliminates the risks of being attacked by hackers as there is no central point for attackers to exploit.
Blockchains securely store every transaction that takes place on their network. The Blockchain behind Bitcoin currently states that there will only ever be 21 million Bitcoins created.
Isn’t the Blockchain Private?
One of the biggest criticisms Bitcoin and other Crypto’s receive is that all transactions are kept private. This is not actually the case. Transactions on the Blockchain are anonymous but they are not private. Every transaction gets recorded onto the Blockchain permanently. Bitcoins and other Crypto Currencies are stored in ‘wallets.’
Whilst the wallets themselves can be anonymous, the addresses of the wallets are not. Therefore, all transactions taking place between one wallet to another are available for all of the public to see. (We shall post more on wallets in the near future).
No Blockchain double entries or duplication
There is protection against ‘double spending’ which means it is not possible for digital money to be duplicated and spent on more than one occasion.
What can Blockchains be used for
The Blockchain technology is not only suitable for exchanging digital currency, but can also be used to store medical records, record events, exchange contracts, buying and selling assets (such as property). We are firm believers that the Blockchain technology will have a massive impact in so many areas.
Blockchain solves the problem of manipulation. When I speak about it in the West, people say they trust Google, Facebook, or their banks. But the rest of the world doesn’t trust organizations and corporations that much — I mean Africa, India, the Eastern Europe, or Russia… – Vitalik Buterin (Co-founder of Ethereum)
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