Demystifying #Blockchain

Everyone is talking about blockchain and if you haven’t heard of the term yet, it is safe to say that you might be living under a rock! But don’t worry, it’s not too late yet. Blockchain is poised to go mainstream very soon, so this is the right time to find out a bit more…so read on.

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A question I often hear is

what is the difference between blockchain and bitcoin? The two terms might confuse some, but to clear things up, they are two separate things yet very much related. Sally Davies at FT does a brilliant job at demystifying this for:

“[Blockchain] is to Bitcoin, what the internet is to email. A big electronic system, on top of which you can build applications. Currency is just one.” — Sally Davies, FT Technology Reporter

To put it simply, blockchain is a decentralised database / ledger that constantly updates ownership records. It doesn’t have a central administrator overseeing it – instead a distributed ledger has a network of databases, which essentially are exact copies of each other, connected and synced via the internet and anyone in the network is able to view it. The true power of the blockchain rests in the fact that it eliminates the need for a centralised platform to facilitate trade and exchange thereby driving efficiency and transparency. It relies on peer to peer verification of transactions with transaction history stored in blocks of data.

Bitcoin, on the other hand

is a digital currency i.e. a medium of exchange. Back in 2008, Bitcoin first appeared in a white paper written by Satoshi Nakomoto (which most likely was a pseudonym). The white paper described a P2P (peer to peer) electronic cash system called Bitcoin that enabled online payments to be transferred directly, without an intermediary or centralised institution – click here to read the original paper. Whilst Bitcoin as a concept is very exciting, what is really revolutionary and truly innovative is the technology that it sits on i.e. the blockchain.

Bitcoin no doubt is a great use case when it comes to blockchain. However there are other areas that can benefit from this technology. An area that can be completely transformed is sharemarket trading. Recently the Australian Securities Exchange (ASX) bought a $15 million stake in Digital Asset Holdings, a developer of blockchain technology. One of the main reasons for the investment is to upgrade its share registry system by using blockchain or distributed ledger technology.Click here to read more.

Blockchain continues to evolve and is on the brink of going mainstream in financial services but its application is relevant to other industries as well such as Real Estate and Healthcare.

Exciting times ahead!

Hayden P.

A blockchain and cryptocurrency enthusiast

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