What is Blockchain?
Blockchain is a technology, which Bitcoin is based on. Although this technology started with Bitcoin, it can be applied to many other areas e.g. real estate instead of only banking. You wouldn’t need a notary any more to purchase properties. It can safe you many thousands of €. Why? Because Blockchain is a decentralized database also known as ledger, which doesn’t need intermediaries or 3rd parties to do transactions. That’s why the slogan is „Be your own bank“ to have more control over your money. The decentralization makes it less manipulable and more secure from cyber attacks.
So basically you transfer money directly to the other person. The transactions are summarized with a hash stamp on it. Today it is about 1100 transactions per block on average. The hash has a similar function of a mailbox’s label as an example. It just looks totally different like a code with combination of numbers and letters based on a special algorithm. As soon the block got a hash stmapEvery block will be extended by another block like a chain. That’s why it is called blockchain. Each block’s weight about 1 kilobytes, so with the current weight of the whole bitcoin’s blockchain of roughly 150GB, there should be at least 150m blocks out there. Which also means, there are at least 150b transactions right now.
This blockchain is decentrally stored in many computers. This kind of computer is also called nodes. Besides the blockchain is transparent, because it is public, which mean everyone can have a look at it. In order to run the blockchain, you would need many computers to run. It is also called as mining. Those miners will get bitcoins as rewards. For each block the miners get 12.5 BTC as a reward. It will cut in half in about 2020 to 6,25 BTC. It’s also called a proof of work method, but it is time and electricity consuming. That’s why Bitcoin is only able to do 7 transactions per seconds. Each transactions consume roughly as much electricity right now as a house for 1 week. Proof of stake doesn’t require miners. That’s why is less power consuming. For example the altcoin Dash is based on it. It requires „stakeholders“ instead. In this case it means, how many cryptocurriencies someone has. The more stakes someone has the higher the rewards, which is quite similar to stocks with its dividends.
The blockchain’s scope is massive right now, because it can use smart contracts, which is able to replace normal paper contracts, which also means an attorney is not needed any more. That’s why it is regarded as a disruptive technology, which is able to disrupt the banking industry, real estate industry, logistics and may more. Let’s see how this technology will go on.
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