Do you know there's an easier way to complete transactions without having to deal with online wallets, banks and third party applications.It is 'Blockchain'.
▶️ Blockchain is early like to the internet in1990's but it could be as big.
▶️It is not a subset of internet like e-commerce or social networking or email but it is something as fundamental and parallel to the internet.
▶️It sounds incredibly simple but very complex to understand.
▶️It has the potential to change our lives in the next twenty years the same way the internet has changed in the last 20 years.
▶️ Blockchain is not 'Bitcoin'.
So what is blockchain then?There are different ways to think about blockchain and one way is think of blockchain as one big ledger in the cloud.Everything that you own including money is nothing but are entries on the ledger.So for example you send 100 dollars money from USA to your friend in India so it's not the money that flies from here to there,it's actually a ledger entry which happens in your ledger and your friend's ledger and money is transferred.Now the problem however is between your ledger and yours friend's ledger there are bunch of other ledgers.These are bunch of ledgers owned by banks, financial institutions,regulators, insurance companies and each of these ledgers have to be reconciled and changed and because you have to change so many ledgers it causes friction and what this friction causes is a time delay and obviously cost .
So the money send by you to your friend in India reaches to him maybe five or six days later and maybe only 94-95 dollars reach to him .
Now , imagine instead of these broken system we actually had one universal ledger and all the participants in the transaction were nodes in that ledger and everytime an entry had to happen every single one of them had to authenticate it so that we needed only one entry on realtime basis.
Now this concept of single universal ledger is actually what is the heart of the blockchain.
Whenever a transaction or a group of transactions happens it gets added on as one or more block in a chain of already existing transactions and obviously this transaction which has been added has been authenticated by everyone and also this blockchain is protected by best cryptography algorithms available.So it's very difficult to hack.
The other important thing is every block is immutably linked to the last block and if a hacker wants to change one transaction or a block he or she has to change the entire chain which is very difficult to do.Therefore it is super secure and is driven by consensus and immutability.
Another important thing of blockchain is that you can actually trace back any event.Blockchains also foster this thing called smart contracts which is logic built in most blockchains .Due to this whenever an event happens it triggers another event automatically and this is very useful.
Finally no one owns the chain.So you would be thinking now that who maintains it it's not one bank or a single trusted authority.Infact it's the entire bunch of people.But to maintain these chains you require resources.You require computing power, electricity,time,money.
So in 2008 Satoshi Nakamoto invented a currency and that currency was the incentive for all those people maintaining this chain.This currency was called 'Bitcoin' and the guys who managed the chain were called 'Minors'.
So that was a very high level of understanding of what a blockchain is.But there's an other way to think about blockchain.Probably a more friendlier one.
So a blockchain is actually somewhat like a chit fund.In a chit fund scheme,a group of people contribute periodically towards chit value for a duration.The amount so collected is given to a person, who is either selected through a lucky draw or an auction.
Let's say that a chit fund scheme has 100 members ,each paying 500 Rs to have a first pot of Rs 50,000 . There's a lucky draw and the lucky winner gets the money.This process gets repeated.Now as this members are putting in this money and this lucky draw is happening and if I am one of the members then whom I am trusting.There's no one single authority,bank etc.I am trusting all of them and I am also trusting the fact that if they want to defraud me most or if not all of these members have to be influenced and therefore I am changing the concept of trust from centralized trust to distributive trust.It is this distributive trust which is the heart and soul of the blockchain.Think of all these members as nodes.Think of money as cryptocurrency and the distributive trust around it .So a blockchain is really useful when it has four things that is consensus for distributive trust, security because of non hacking possibilities,there is provenance as you can trace an event back and obviously trust.
So now that we have known about what exactly is blockchain technology ,let us see what vital roles it can play in future.
Blockchain technology can play a major role in changing a country's economy.Infact there are many countries that support blockchain innovation like Switzerland,United Arab Emirates, United Kingdom,United States,Sweden.
Blockchain has vast applications.In an economy it can be used in agriculture sector,energy sector, health care sector , education sector,subsidies,banking,voti-ng, e-governance. Blockchain technology has wider reaching applications across many fields.
The full potential of blockchain technology is yet to be discovered.
Therefore to summarise ,a blockchain is a collection of blocks connected with each other strongly , resistant to alteration and protected using best cryptographic algorithms.Each block contains some data,hash of the block (similar to unique finger prints) and hash of the previous block.It has pros like improved accuracy,decentralised system,secure transactions , eliminate third party verifications.Along with pros it has cons like technology cost,no regulatory authority,using of this technology for illicit activities like money laundering.Inspite of the cons there's an incredible scope in block chain technology in future.
