Beginner’s guide: Blockchain explained for the uninitiated

Over the last decade, the world has seen an explosion in transformative technology. We can now virtually connect with friends and families instantly, digitally pay for a product or service with our faces, and hail a ride, all from the same hand-held device from the comfort of our homes. While these innovations have vastly simplified our daily lives, a much more complex and disruptive technology has been on the rise. Since its first introduction in 1991, Blockchain has evolved into one of the main drivers of an increasingly digitized world economy. Keep reading for Blockchain explained from Tokenize Blog. 

>>>Read more: Beginner’s guide: What is cryptocurrency?<<<

So, what exactly is Blockchain? How is it disrupting the traditional systems of business, governance, logistics, and finance? What are its applications in digital currencies like Bitcoin and Ethereum? Are they the same thing?

What is Blockchain?

In order to comprehend cryptocurrencies, it is important to first have an understanding of the technology behind them — Blockchain.

Blockchain is a decentralized, digital, and open ledger. It is a sequence, a chain of blocks, or groups of transactions that are connected and then distributed to independent parties. Complete rocket science right?

Let’s use a simple example based on conventional finance. Say there was a need to transfer a sum of money from one bank account to another, the bank would start a whole process of verifications and checks before the transfer can be completed. An everyday transfer, especially the ones that are across different countries or financial institutions, would mean substantial time, as well as bank and/or exchange fees.

The key thing to note here is that there are different records/databases/ledgers to validate, as well as the presence of an intermediary — the bank. Hence the ‘trouble’ and the cost behind a simple transfer of money. However, with the same decentralized and open ledger (Blockchain) which all parties can have access to, it essentially eliminates the inconvenience and costs associated with a third party (bank) verification, since there is now only ONE version of records which the two parties can immediately verify.

Blockchain explained in a nutshell

Check out this useful infographic by the Financial Times:

See? It’s that easy. Blockchain is a complex technology, but its potential is in how it can facilitate transparency and efficiency through decentralization. Think faster and cheaper cross-border payments, secure healthcare records, transparent digital government elections, and DeFi (which might well result in a paradigm shift from traditional finance).

In short, Blockchain is NOT Bitcoin. It’s the technology driving Bitcoin and other cryptocurrencies. It can also be applied to a whole host of other industries. It’s all about Blockchain explained. Keep Tokenizing! 

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