To a lot of people, the term ‘Blockchain’ is a synonym to ‘Bitcoin’. Bitcoin and other cryptocurrencies indeed use blockchain technology to maintain their unique characteristics of being secure, location independent, and decentralized. However, cryptocurrency is only a single, very well-known part of a wider range of applications that blockchain can be used for.
A Simple Yet Effective Method
At its core, blockchain is a sophisticated, yet deceptively simple method of keeping checks and balances in the world of online transactions. Where traditional markets make use of intermediaries such as Amazon, Walmart, and other middlemen between the buyer and the seller, blockchain makes it possible for peer-to-peer transactions to take place conveniently. To put it in the simplest of forms, blockchain operates like an encrypted excel sheet, where every transaction is logged and can be tracked by users. These transactions happen in real-time and have to be approved by third-party anonymous individuals to preserve a trustworthy financial tracking system. This also helps to maintain a decentralized network of entities that can keep a check on the system in real-time.
Traditional markets have to place their faith in the entities that act as middlemen to maintain a system of accurate records and to facilitate trade. Blockchain, on the other hand, facilitates a peer-to-peer system of trade where all the involved parties place their faith in the efficiency of the system, and not on the entities who have control over a system of trade.
The part about blockchain that makes it stand head and shoulders above any other similar technology in development, is the fact that the records that are maintained in a blockchain can be edited only based on present and future transactions. This is to say that while each transaction can be logged and maintained as it happens, past transactions cannot be altered. This is done to maintain a record of transactions that took place in that blockchain, to maintain an immutable and definitive system of transaction records, which is nearly immune to incorrect entries.
Blockchain is currently a buzzword of sorts that is reported on by the media since it is a novel system that is impacting trade. It is also in vogue because cryptocurrencies use it as their backbone, in a sense, in providing a decentralized and secure means of trading.
However, once we remove all the jargon, blockchain is nothing more than a new and safe method of conducting and keeping track of trade, while also removing the middleman between the buyer and the supplier.
It is a very real possibility that blockchain technology becomes so prevalent due to its inherent qualities, that life without blockchain may seem as odd to think about as life without traditional currency today. As we move toward the future, it is the technology of today which facilitates an easier transition to a new world of tomorrow, where the average person doesn't have to rely on third-party trade facilitators and can trade at will on a more direct basis.