For the first time in history technology makes it possible to transfer property rights (such as land titles, shares, digital money, etc.) fast, transparent and very secure. Moreover, these transactions can take place without the involvement of a trusted intermediary such as a government, notary, or bank. Companies and governments are no longer needed as the “middleman” in all kinds of financial agreements.
The ability to replace middlemen with mathematics & computer science is why this technology matters. The blockchain market is young technology which will allow startups to create new decentralised markets and build services that were not possible before.
According to a recent World Economic Forum report, 10% of global gross domestic product (GDP) is expected to be stored on blockchains by 2027.
A network of computers keeps track of bitcoin payments, and adds them to an ever-growing list of all the bitcoin payments that have been made. This list is a file called “The Bitcoin Blockchain”, and sits on thousands of computers across the world. Think of Bitcoin as a single application, the blockchain as the whole platform. Bitcoin is a browser, or email; the blockchain is the underlying protocol, like HTTP or TCP/IP.
Banks keep track of customer balances on a ledger. Bitcoin also uses a ledger, but it is maintained collaboratively by the decentralised network of computers, and is known as the Bitcoin Blockchain.
Understand the Blockchain in Two Minutes
It can hold any information, and can set rules on how information is updated. Its primary feature is that it is updated in discrete chunks called ‘blocks’ which are ‘chained’ together using hashes of the previous blocks content. A blockchain contains not only the information that is currently stored in the database, but also every change made to the database in its history. Known as the state and transactions respectively it makes for a database with a complete custodial history that cannot be altered without altering every subsequent block. A private key always signs ‘Transactions’ or requests to change the state of the database, and the signature is stored in the blockchain.