A brand-new revolutionary technology is rapidly gaining momentum. The blockchain technology, which was created in 2008 to serve Bitcoin when it launched a year later, is being used almost in every corner of our world.
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.” – wrote in an announcement Satoshi Nakamoto, a founder of Bitcoin.
The blockchain is a public record of Bitcoin transactions in chronological order. The blockchain is shared between all Bitcoin users. It is used to verify the permanence of Bitcoin transactions and to prevent double spending. Majority of people use a trusted third party, for example, a bank to make a transaction. But blockchain allows both consumer and supplier to connect directly, eliminating the need for a middleman.
How does Blockchain work?
On a simple example, we will find out how this system works. Imagine you want to send Bitcoin (or some other cryptocurrency) to a friend, or sell it, that information will be available for every user on the blockchain. They might not know who you are, but they will know exactly how much trade coins have been transferred from one person to another.