Everyone agrees that the tech is a huge advancement – probably the biggest since the dawn of the internet.
As a result, most big companies like Google and Amazon are fighting to get their piece of the cake by working on their own blockchain solutions.
Putting in the time to read this blockchain 101 guide will pay off tremendously.
Compare this to reading a book about the internet back in 1994, when TV shows were still discussing the birth of emails.
The future of decentralized technology is bright, and whether you’re interested in cryptocurrencies or in blockchain technology, knowing the basics of blockchain is a must.
This includes a simple explanation on how do blockchains work, what problems they solve, and their incredible benefits to the world.
Curious about cryptocurrencies and not so much the underlying tech? You might have missed our introductory guide on Bitcoin, check it out!
What This Blockchain for Dummies Guide is NOT About
We want to make it clear that this blockchain for dummies guide will not be about learning how to develop blockchains or anything technically advanced.
If you are thinking of becoming a Blockchain professional, or if you want to learn more about its technical aspects, we suggest you check out our partner Blockgeeks (use our exclusive coupon codes CryptoManiaksPRO and CryptoManiaksACC for 20% discounts on their premium products).
They offer the best resources available online for this purpose and have already trained an incredible number of blockchain professionals.
Blockchain technology is changing the world around us and we’ll cover many of its applications within this blockchain 101 guide.
Let’s get started!
Blockchain For Dummies: A Simple Explanation
A blockchain is basically a chain of blocks. Blocks contain digital information – picture them as packets of data all tied up, like a Christmas present.
In the case of Bitcoin’s blockchain:
- Inside each block is a series of Bitcoin transactions that have taken place within a certain timeframe.
- All the blocks together constitute Bitcoin’s blockchain and witness all the transactions that occurred since its creation.
What was the First Platform That Used a Blockchain?
Bitcoin, the first working example of blockchain technology, was invented as a response to the inefficiencies of centralized banking institutions.
Its launch in 2009 immediately following the 2007/2008 financial collapse is not a coincidence.
The creator(s) of Bitcoin were inspired by democratic idealism encouraging individual autonomy within the monetary system.
Where is a blockchain located?
By essence, blockchain is a network of computers that can be located all over the world.
Computers contributing to a given blockchain possesses the data or transactions that have ever been written on that blockchain.
This specific characteristic is what makes blockchains decentralized and incredibly robust, as they are able to survive power outages and political turmoil.
The more computers the stronger the blockchain. This is how blockchains work in a decentralized manner.
Is There More Than One Type of Blockchain?
There are probably over 10,000 blockchains in existence today. Most blockchains are either public or private.
Public Blockchains. In this example, an open source software is used by everyone participating in the network. Anyone can join and the network has a global foundation. For example, a lot of cryptocurrencies are built on existing blockchains, ERC20 tokens being the most well-known example built on Ethereum.
Private Blockchains. These use the same principles as public ones except the software is proprietary and hosted on private servers instead. Companies such as WalMart are developing their own blockchains to track supply-chain logistics.
Technical Benefits of Blockchain: An Overview
Source: World Economic Forum YouTube Channel
Blockchain technology is one of the most promising new technologies to date.
It provides a method of recording and transferring data in a transparent, trusted, and provable way.
It allows individuals and companies to engage in a transfer system that is fully transparent, democratic, and secure.
Most importantly, it allows trust-less storage and transactions, removing the need for intermediaries. You might not realize the impact of those benefits yet, so here are some examples to help you.
- Visa monetizes trust as the intermediary between merchants and customers.
- Amazon monetizes trust as the intermediary between sellers and customers.
- Uber monetizes trust as the intermediary between drivers and customers.
And the list goes on. If you notice, every single example requires trusting an intermediary with your information.
Having a central point of data collection poses a security risk, your information no longer belongs to you, a company now owns it. What they do with it is their prerogative.
The adoption of blockchain technology will remove the need for third parties and will allow trust-less peer-to-peer transactions.
In the worst-case scenario, it will reduce the costs for companies and the fees for the end-users of a trust-based service.
In the best scenario, it will completely remove the need for intermediaries in most industries.
Practical Benefits of Blockchain: An Overview
The blockchain is already disrupting industries such as:
- Banking and Payments. Blockchain technology can give financial services access to the “unbanked” of the world. It will make the monetary system more transparent for the “banked” people as well. Most banks are also developing their own blockchain solutions as it will make their operations faster, more secure and efficient.
- Online Data Storage. Cloud storage systems, as we currently know them, rely on large centralized databases. This leaves data vulnerable to privacy breaches and the potential for environmental catastrophe. Blockchain makes data safer by removing failure points. It will also create even more cost-effective storage options.
- Voting. Blockchain will make elections more transparent and fair than ever before in the history of humanity.
Blockchain technology is currently disrupting, or it will disrupt any industry that involves data and transactions.
This includes economic sectors involving intermediaries that monetizes trust, think bureaucracy in financial companies and even the governments.
From here, our blockchain for dummies guide will dive into each of the aspects we just touched upon more in-depth. From the benefits of the blockchain to the problems it solves, including some more advanced concepts.
If you don’t really care about the technicalities of blockchain and its interaction with cryptocurrencies, skip and read the chapters relating to the benefits of Blockchain Technology.