Understand the Blockchain Technology and Bitcoin in two minutes.
Here is an attempt to explain Blockchain Technology and Bitcoin to our non-technical readers so that they can easily understand What is Blockchain Technology and Bitcoin, and correlate how its impacting online industry and other sectors. This article is using very basic and relevant information that we feel is enough and important for the readers at this stage rather than use of complex terminologies, charts and long paragraphs. Blockchain can be looked as a digital log or an online ledger or a distributed database that exists on multiple computers at the same time. Each block consists of a timestamp and a link to the previous block, so they actually form a chain. Blockchain is highly about transaction management.
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What is Bitcoin?
Bitcoin is a cryptocurrency which means it is a digital currency. It is used to regulate the generation of units of currency and verify the transfer of funds. Bitcoin is a subset of Blockchain technology. A Blockchain is used to record the transactions made in Bitcoin or another cryptocurrency.
Pros and Cons of Blockchain and Bitcoin:
- Bitcoin can be exchanged peer-to-peer without the need of third party.
- Distributed: Blockchain database exists on multiple computers at the same time.
- Decentralized: Blockchain does not have a central point of failure and is better able to withstand malicious attacks.
- Empowered: End Users have control of their information and transaction.
- Transparency and immutability: Changes to public Blockchain are publicly visible by all parties, creating transparency and all transactions are immutable, meaning they cannot be altered or deleted.
- Physical cash is the liability of a government, Bitcoin is a liability of nobody. This is the drawback as there is nothing to stop its value from falling to zero.
- Signature verification: Each transaction must be digitally signed by public-private cryptographic key.
- Redundancy: In a Blockchain, transactions are processed independently by every node in the network so the amount of work done for the same end result is higher compare to centralized databases.
- Network speed: Always slower than centralized databases because of distributive nature.
- The size of the block: Each transaction or 'block' added to the chain increases the size of the database which in turn increase computing requirements.
- Cost: High initial capital costs but Blockchain offers tremendous savings in transaction costs and time.
Who all are transacting using Bitcoin?
Growing number of businesses and individuals using Bitcoin. This includes brick-and-mortar businesses like restaurants, apartments, and law firms, as well as popular online services such as Namecheap, Overstock.com, and Reddit. While Bitcoin remains a relatively new phenomenon, it is growing fast.
Future of Blockchain technology
Blockchain technology is going to change the way we do business today, mainly it is going to impact finance sector. A traceable global currency will not only result in massive cost reduction for all market participants, it will change global banking.
- Blockchain will be adopted by central banks and cryptographically secured currencies will become widely used.
- New technologies such as Blockchain have the potential to reduce cyber risks by offering identity authentication.
- Small businesses could use Blockchain to create trusted trading platforms among themselves.
Blockchain technology market size worldwide 2016-2021