So how is all this money worth anything at all? This answer is blockchain
technology. If you plan to invest any money at all into cryptocurrencies, it is
vital that you have at least a basic understanding of blockchain technology and
Blockchain technology allows for a permanent, incorruptible record of all
transactions that have ever taken place, free from human errors or data loss. The
important thing to remember is that these transactions do not always have to be
financial, they can be in the form of legal contracts, auditing consumer goods
and file storage.
Blockchain is essentially a giant database that is not stored in a central location.
A floating database if you will. Because it is not stored in any single location,
transactions recorded on the blockchain are publicly accessible and verifiable.
We again go back to the idea of decentralization, and not having to rely on a
single person or government to ensure our transactions will be safe.
In more practical terms, imagine all your financial information was stored on a
single spreadsheet, not particularly safe right? Even if you had online and offline
backups, these would be just 2 or 3 points of failure. What blockchain allows for
is that spreadsheet to be shared across thousands of databases and continuously
refreshed meaning that any changes would be recorded and no hacker could
corrupt it at a single point of entry. As there is no single point of entry, there is
now no single point of failure either.
Blockchain technology could be used to transfer everything from
cryptocurrency, to tangible assets such as property without having to use a
middle man such as a bank or other financial institution. This has potential to
save consumers and businesses billions of dollars a year that are spent on
transaction fees. While Bitcoin has gathered more mainstream press with regards
to consumers, blockchain technology receives more interest from businesses.
How does Blockchain relate to Bitcoin and Cryptocurrency?
Bitcoin is not blockchain and blockchain is not Bitcoin or any other
cryptocurrency. Bitcoins or other cryptocurrencies are transacted over a public
network that runs on blockchain technology.
Blockchain is the underlying technology that allows Bitcoin and other
cryptocurrency transactions, but as previously mentioned – blockchain
technology has many more potential uses. You can think of blockchain as an
operating system, and Bitcoin as one of the hundreds of applications that run on