Understand the Blockchain in Two Minutes

 

What is Blockchain anyway?

The word blockchain comes from the English word for literally translated block chain. The blockchain is first of all a database, ie a piece of software in which data is stored. The “Creation block” starts, all other blocks are first checked and then appended chronologically in the back. So far so good.

Who invented the Blockchain?

The concept has a gentleman with the pseudonym Satoshi Nakamoto (maybe he really is called Craig Wright, maybe not) for the virtual currency Bitcoin. Satoshi needed something like a common and public cash book for all users. Rather like a huge Excel file, in which you can only add new entries and delete or change older ones.

Is not Blockchain the same as Bitcoin?

Blockchain as a theoretical as well as technical foundation is much more than bitcoin or other similar cryptocurrencies. Bitcoin behaves like Blockchain as the World Wide Web to the Internet – a concrete application versus the entire platform.

What’s so special about Blockchain?

First, the blockchain is a distributed database. It is not on any servers, but every user has their own and complete copy. Second, the blockchain is tamper-proof: each new block is associated with the previous block and contains the history in the form of its checksum (a kind of checksum). In addition, each block also contains the checksum of the entire chain. This makes the order of the blocks unique. Third, all data is stored encrypted. Together this effectively prevents corruption and manipulation. The entire network legitimizes each other and becomes its own “Source of Truth” (but some progammier speaking, sorry).

What can you do with Blockchain?

Transactions or information stored in a blockchain are, in principle, real and immutable and therefore no longer need anyone to administer or authenticate them. Blockchain makes business models possible without middlemen, such as securities trading without banks or home purchases without a notary. “Smart Contracts” with programmed rules and functions could replace conventional contracts on paper, musicians and other artists use their digital rights differentiated. The goal is basically to put the people in the spotlight and to enable a so-called peer-to-peer communication between them.

And what does that mean in practice?

Blockchain technology has a particularly high potential for discarding the financial sector. According to hectic, there is already research on the topic (of course you do not want to miss the train and suddenly be superfluous). Overall, Blockchain promises that financial services will become faster and cheaper. Not just for the customers – even the banks would not need to have their own central and expensive IT infrastructure anymore.

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