Blockchain is the latest buzzword and technology trend online, yet for many this remains an abstract concept. Here’s a quick guide to understanding Blockchain in 5 minutes.
Introduction – Bitcoin
In 2008, an anonymous person released a paper explaining how we could execute financial transactions without the need of intermediaries. This happened shortly after the economic crisis and the crash in confidence to financial institutions.
The technology behind bitcoin is revolutionary, and people named it Blockchain.
In short, bitcoin is an application using the technology of Blockchain, which allows information exchange without the need for a central authority. Bitcoin is only one of the many applications using Blockchain.
What – is Blockchain
If you want to send money to your friend, you have a few options. Either you go to the bank and make a transfer. Or you use paypal and send money through an online account. Or you can go to agencies such as Western Union, fill in a form, and send the money.
The thing in common? You have to go through some sort of intermediaries (bank, agency, online platform) to process the transaction.
How – does Blockchain work?
Blockchain is a large database allowing information to be stored (inside “blocks”) and transmitted. It contains the history of all its users’ exchanges since its creation. Everyone can check and verify the transactions, but no one can modify it.
Blockchain can be used to transfer assets (e.g. currency, shares), to track and check those at any time and to automatically execute contracts (i.e. smart contracts).
Who – can use Blockchain?
Technically, you and me. Anyone with an internet connection. But the reality is that only a few institutions have implemented Blockchain in their system.
Although Blockchain has been disrupting the financial sector (UBS and BAML are on their way to implement this technology), other institutions have been less keen on shifting to this newer alternative.
Why – is blockchain revolutionary?
Blockchain has the merit of being:
- Secured and neutral: Blockchain is decentralised and controlled by algorithms and programs.
- Transparent: everyone can access the data-base and check the past and present information
- Neutral: no 3rd party or intermediary involved.
Blockchain is a cost- and time-efficient technology. It has the potential to disrupt many industries, and the global economy overall.
Financially Sound Woman 