Blockchain 101: What you need to know about the internet’s new era
If the term “blockchain” is new for you or you find it a little confusing, you’ve reached the right place! And you can’t leave until you learn something today. So get comfortable and let’s get started.
In today’s world, technology advances are moving forward all the time, and this growth doesn’t seem to slow down. We’re talking about new stuff coming out every day. In the past years, there has been talks about something that will completely change the internet and the world’s system as we know it; this is Blockchain.
Blockchain is a communication system to digitally share any financial activity or any valuable information, without the use of third parties in the process. It’s also known as a distributed ledger. This means all transactions are watched over and approved by a computer network (thousands of them, all around the world). Why is this an advantage? There’s no way that any operation made inside the blockchain is altered or corrected without permission of the miners - who look over and approve transactions- which gives all the operation security and transparency.
Ok but, what does this mean? Let me tell you a story: Sara lives in the United States and her parents live in Mexico City. Sometimes she helps them by sending them money through a company. When she does it, the company charges a fee for sending the money and charges a fee to her parents, for receiving it.
What would happen if Sara could send her parents money anywhere in the world, without paying any fee for doing so? Do you think she would choose this option? What about the transaction being monitored by thousands of computers all around the world, making it incorruptible? This is possible with Blockchain and its most valuable asset: the miners.
What does mining have to do with any of this?
When the information in one of the blocks of the chain gets altered, there needs to be a validation to approve changes, otherwise, the block with the information would get deleted and the chain would break. Miners are responsible for this. These are mainly developers from lots of countries, living and making money by solving algorithms to confirm information blocks in chains.
Get it? Blocks and chains. Blockchain. Ok, imagine a large chain of blocks. Each block has three things: information on any transaction, a unique code of numbers and letters that works as a unique fingerprint and a hash (which has encrypted properties of the block) of the last or next block in the chain. When there’s a change in information, a new block gets created; to confirm this block, the miners need to do a complex mathematic operation; when someone finds the solution, this person shares it with all the computer network to confirm the information and the block joins successfully to the chain. The miner that found the solution wins money in Bitcoins, the most known cryptocurrency the world.
So, is Bitcoin a synonym for Blockchain? No. Bitcoin is a digital currency that can work as any currency in the world, the only difference is that Bitcoin does not have a bank to back it up. Everyone can have access to this coin because its creator Satoshi Nakamoto didn’t give anyone a license; Blockchain users are the one keeping the platform alive. Bitcoin is not the only cryptocurrency that exists, there are a lot of them and they can be used to buy lots of things online. Ethereum, Ripple. EOS and Litecoin are just a few of the list.
Who controls Blockchain? Is it really secure?
Blockchain is controlled by every computer that has a specific platform, and being a distributed system, everyone has control of the network. This means that everyone has the information on every other computer in the network but only the user that owns the block has control on their own information.
If someone would want to hack an information block, they would have to hack every computer in the large Blockchain network. Thousands of computers, all around the world. This is because if there’s a change in the block data, it needs to be validated. If it’s not, the block will be invalidated from all the computers in the network.
So, why choose Blockchain over other stable, proven technologies?
It’s a safe and direct communication system, that gets rid of third parties to share important information
Every computer with Blockchain shares the information but every user is the owner of his or her own block.
Any transaction or movement is viewed by everyone, creating a secure, transparent network for any purpose.
Tasks get done faster
Every movement leaves a trace, its immutable and it’s not possible to edit or delete it.
Fraud is avoided, because it's a transparent network so it can help in inventories, contracts, etc.
Blockchain gets rid of the third parties, which also reduces costs. This technology has been applied on remittance, public records, smart contracts, payments between users, intellectual property, data protection, money laundry prevention, and even electricity distribution.
As we have seen, Blockchain is a technology tool that can revolutionize the world and turn into a more secure, transparent digital world. This technology is dynamic and anyone can use it so the world is slowly discovering Blockchain’s potential. We’re on the edge of the 4th Industrial Revolution (link to blog), with everything that’s been happening with Blockchain, AI, and big data.
We’re on our way to an even more advanced, technologic world and the way we live, share moments and communicate is changing constantly. Avocado wants to be present for it, being a home for talented people to build a more transparent, more secure world with Blockchain.