CryptoCurious: An Intro to Blockchain Technology for Newbies

August 2, 2022

Read Time:4 Minute, 28 Second

If you’ve heard about blockchain technology but aren’t quite sure what it is or what it has to do with cryptocurrencies like Bitcoin, then this article is for you. You see, while the world is going crazy over the red-hot crypto market and new digital currencies are popping up every day, not everyone understands how blockchain technology works and why it’s so revolutionary. It’s a fairly complicated subject, but luckily for you we have just the guide you need to understand the ins and outs of blockchain.

What is a blockchain?

A blockchain is a decentralized, distributed ledger that is used to record transactions or any type of data. It’s a virtual ledger that can be shared among a large network of computers, where all the computers are keeping track of what information is being added or updated. All of the computers are working together to achieve consensus on the information being added to the ledger, which makes it nearly impossible for data to be tampered with. There are several types of blockchains, but we’re going to focus on public blockchains which anyone can access. Public blockchains are open-source, decentralized ledgers that are used to record transactions without the need for intermediaries like banks. The data that is being added to a public blockchain can be anything, but most commonly the data is cryptocurrencies, smart contracts, and other types of tokenized assets.

Why should you care about blockchain?

Blockchain is much more than just a buzzword. In fact, it’s a game-changing technology that has the potential to disrupt every industry imaginable. Blockchain has the power to do many things, including but not limited to: – Create a decentralized internet: The internet was originally designed to be decentralized. But as it grew in popularity, centralized servers were used to host websites and data. This made the web dependent on a few centralized organizations, which led to the creation of companies like Google, Facebook, and Amazon. Blockchain has the power to decentralize the web and enable people to create websites and apps that aren’t hosted by just a few companies. – Enable tokenization of assets: On top of allowing people to send money and make online purchases without intermediaries, blockchain technology also enables the tokenization of assets. This means that assets like stocks, loyalty points, gold, and diamonds can be digitized and transferred via a blockchain among trusted parties.

How does blockchain technology work?

Before we get into the different blockchain use cases, let’s take a closer look at how blockchain technology works. Blockchain is made up of a network of computers that are all connected to one another and are referred to as nodes. The nodes are connected through a peer-to-peer network that uses cryptography to secure communications, such as using public/private key pairs. All of the nodes in the blockchain network are able to communicate with one another and access the blockchain. Once data is added to the blockchain, it cannot be changed or altered. The data is stored in a distributed network, which means that all of the nodes have a copy of the data and no one computer has a complete copy. This is referred to as a consensus mechanism. Think of it as a group of people working together to agree on the information being added to the ledger. For example, if two people are buying a house from each other, the blockchain will be used to record the contract being signed. Once the two parties sign the contract, the data is being added to the blockchain and no one can change that information. The parties can trust that the data is authentic because it has been added to a tamper-proof blockchain network.

Blockchain use cases beyond Bitcoin

As you can see, blockchain technology has the potential to change many industries. But how exactly does it do that? Well, blockchain technology has multiple use cases, one of which is the storing and transferring of cryptocurrencies. You’ve probably heard that Bitcoin is a cryptocurrency, but what does that mean exactly? Cryptocurrencies are digital tokens that are created via blockchain technology. You can use cryptocurrencies to send money or make purchases without having to use banks or any third parties. Another blockchain use case is smart contracts. Smart contracts are digitized contracts that are stored on a blockchain. They work as if they are automated computer programs that are executed when certain conditions are met. For example, a smart contract could be used to trigger a payment when someone delivers a certain amount of goods. Another important blockchain use case is tokenization. As we mentioned above, tokenization is the process of digitizing an asset and storing it on a blockchain. This could be anything from stocks and loyalty points to precious metals and diamonds. Once an asset is tokenized, it can be easily traded between trusted parties.

The takeaway

Blockchain technology has the potential to change many industries and become the new way of doing business. It can be used to store and transfer cryptocurrencies, store and execute smart contracts, and tokenize assets. Blockchain technology is still in its early stages, which means that now is the best time for you to educate yourself about this revolutionary technology and how it can be applied to your future career.