Defining Blockchains: Important Things You need to Know

The blockchain is a really new kind of technology that serves as some sort of database.  It has also become one popular solution for safekeeping digital information is a more secured way.

Recently, the International Data Corporation forecasted that companies and governments will whip out $2.1 billion on blockchains this year.  That figure is more than twice of what has been whipped out last year.

However, even for those who have been involved in blockchain-based transactions, it is difficult to define the technology without being lost of words.

The Relationship of Bitcoin and Blockchain

Even though many people get confused with what’s really up with the two, it’s really very simple.  Cryptocurrencies Bitcoin and blockchain were both launched in 2009.  Bitcoin is the first cryptocurrency introduced to people, while the blockchain was the network on which it was run and used.

So, strictly speaking, Bitcoin is the cryptocurrency, while the blockchain is the network, database, or public ledger.

Where it got its name

“Blockchain” wasn’t its original name, but the term got picked up by the first users.

It was called blockchain because all of the transactions done on the network get recorded on a group of block, which is then linked to other blocks by a sophisticated form of algorithm and cryptography.

Thanks to such highly advanced mathematics, it is next to impossible to go back, rewrite, and do something nasty with the previous records.

While academics have pointed out that this designed has already existed long before the launch of Bitcoin, it was the cryptocurrency which put it right in the center stage with the spotlights on.

Uniqueness of the Blockchain

In most cases, databases are used to keep financial records and financial institutions are tasked to maintain these databases.  For instance, one bank may use a certain kind of database to keep track of how much money their clients still have in each of their accounts.

Bitcoin’s blockchain database, meanwhile, runs in a way that the ledger is kept and updated communally by all the computers hooked into the Bitcoin network.

You can best compare the communally maintained nature of blockchain to Wikipedia since it relies on a broad number of contributors instead of just one author.

This shared nature of blockchain worked to the advantage of the virtual currency.  Perhaps this was the goal Satoshi Nakamoto, the elusive creator of Bitcoin, who wanted to make a currency that is not governed or regulated by a central authority.

No one institution or computer is in charge, and even if one computer keeping records of transactions is hacked or turned offline, the network can continue functioning without it.

Other uses of the blockchain

The earlier efforts to copy the Bitcoin blockchain were accomplished by people who wanted to create virtual currencies with a different characteristic from Finance Brokerage Cryptocurrencies and with their own databases for the storage of all transactions.

Over time, a number of these new currencies were made with distinctly different features that updated the blockchain concept, making it possible for the network to handle more kinds of information.