What Is Blockchain?
What is Blockchain?
What if you could buy a house over the internet with the click of a button? Would you have complete trust that the title would be transferred, that legal contracts would be verified, or that you could leave your mortgage financing up to automated processes?
There is a technology that makes this all possible. It’s called blockchain.
Blockchain is a digital record of information distributed across a network of computers. Since it’s decentralized, everyone has access to the same information, making it a shared point of reference that can’t be altered or corrupted.
How does blockchain work?
A blockchain stores data. Similar to bookkeeping, it keeps a record of transactions. However, unlike standard bookkeeping, the blockchain ledger requires verification by an extensive network of independent validators.
Every time a transaction is made, the network must reach a consensus about the validity of that transaction before writing it into the permanent record.
Here’s a simple way to describe the process.
- A new transaction is initiated. (This transaction could be a digital payment, a contract, a vote, or other information)
- The transaction is distributed among a network of computers.
- The network uses complex algorithms to reach a consensus on whether the transaction is valid.
- Several verified transactions are grouped into a block.
- The new block is linked to the chain of previously validated blocks. Now it is part of the blockchain and established as a permanent, immutable record.
Benefits of blockchain
Blockchain is a complex technology that has numerous advantages and applications that can’t all be covered here. Nevertheless, here are some of its key benefits:
- The blockchain ledger is publicly accessible. Since everyone has access to the same information, it increases trust in the network without relying on an outside authority.
- When you make a transaction on the blockchain, it’s recorded publicly without connecting it to your private, personal data. This protects you from data leaks and identity theft.
- No centralized authority controls a public blockchain – not even a bank or government. Instead, it’s made up of many independent actors.
- Since blockchain technology prevents records from being altered, it limits human error and intentional fraud.
- Transactions on the blockchain can be confirmed in seconds, no matter where you are in the world. There aren’t any business hours either. So you can make transactions 24/7.
Future of blockchain technology
The blockchain revolution is just beginning. While the potential for blockchain to disrupt nearly every industry on earth exists, it will require further technological progress and more user adoption.
Still, we’re already seeing practical applications in real estate and other industries. For example, blockchain makes it possible to “tokenize” real estate. It allows you to take traditionally illiquid assets like property and break up the value into smaller shares in the form of cryptocurrency tokens. These tokens can then be traded or sold to a vast market of people who would otherwise be unable to invest in real estate on their own.
As adoption grows, blockchain will improve trust across all parties. It makes it possible to eliminate middlemen, lower costs, verify information, automate contracts, and even increase liquidity in the market. It’s fascinating to think about what could be just around the corner.