A prevalent term in today’s age is one related to a technological advancement that transforms the basic pillars of society. This technology has the strength to influence the way our economy, governance systems, and businesses operate. It could revolutionize our conceptual interpretation of trade, ownership, and trust.
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We’re talking about Blockchain, that is the soul of cryptocurrencies such as Bitcoin. Through this article, we will educate you about the basics of Bitcoin and the technology behind it.
What is Bitcoin?
The first application of Blockchain technology is Bitcoin, the popular cryptocurrency. People often think of Bitcoin as virtual money but on closer inspection, you’ll see that the monetary aspect is only the tip of the iceberg. Money is merely one of the possible applications for
How Does it Work?
Money exists to facilitate trade. There’s no denying that through the centuries trade has become incredibly complex. We use third parties or middlemen to facilitate or approve our transactions. These transactions are then recorded in bookkeeping and isolated from the public. Some of the trusted third parties are:
- Paper Money
Bitcoin software allows a network of computers to maintain a single, distributed ledger over the Internet. This bookkeeping is neither closed nor in control of a single party rather it is public and accessible through one digital ledger. This brings us to the essence of Bitcoin; the Blockchain.
What is Blockchain?
Think of it as a logbook of every single transaction including information on the time, date, participant and amount. Every node in the network owns a complete copy of the blockchain. “Bitcoin Miners” update these ledgers and ensure the verification of transactions using this technology.
Can You Trust Blockchain?
To ensure secure transactions, every node must agree with the other about the ledger’s current state including every transaction. If anyone makes a corrupt transaction, the nodes will not arrive at an agreement. Hence, the blockchain remains unaffected and the transaction deemed invalid. It’s almost as if there is a notary present at every single transaction.
Through blockchain, everyone has access to a mutual, solitary source of truth. For this reason, we can always trust the blockchain. The ledger doesn’t care whether a Bitcoin represents a certain amount of dollars or any other asset. The users are in control of what a unit of Bitcoin represents for them.
A bitcoin is divisible in a hundred billion units, each of which is singularly identifiable and programmable.
- 1 Bitcoin = 1,000,000 units
Bitcoin can represent a dollar or a share in a company or a digital certificate as a matter of fact. The programmable, open character of bitcoin allows us to completely rebuild and innovate our finances.