What is Blockchain?

To share what I have learned or experienced in the blockchain community in South Korea, I would like to keep an ongoing record on Steemit. The first post would have to be obviously about explaining what blockchain is. Many have heard at least once about blockchains, bitcoin, or cryptocurrency, but cannot grasp the concept quite easily. So I will try to provide a simple definition without using difficult terminology.

Bitcoin has recently gained major media attention; however, the revolutionary technology underlying it, known as blockchain, is still relatively unheard of. Bitcoin's recent fame is no in part due to its sudden rise in value, $100 of bitcoin purchased in 2011 would be worth over $1 million today. Bitcoin was created by Satoshi Nakamoto, a mysterious (still unknown) character who suddenly disappeared after exposing this revolutionary technology. The white paper was published in October 31st, 2008 on a cryptography online forum. The main vision was for no central organization or individual to have dominant control over the network. Bitcoin is an incredible discovery as it allows the world to financially transact, without borders, almost instantaneously, and with minimal transaction costs. It is not controlled by any government or institution and does not require either party to trust each other.

Institutions are a tool to lower uncertainty so that we can connect and exchange all kinds of value in society. Now, we are during in a further and radical revolution of how we interact in trade. This is because for the first time, we can lower uncertainty not just with economic and political institutions like banks, corporations, or government, but we can do it with technology alone. So what is the blockchain?

Blockchain technology is a decentralized database that stores a registry of assets and transactions across a peer-to-peer network. It is basically a public registry of who owns what and who transacts what. The transactions are secured through cryptocrography, and over time, that transaction history gets locked in blocks of data that are then cryptographically linked together and secured. This creates an immutable, unforgible record of all of the transactions across the network. This record is replicated on every computer that uses this network. It's not an app, it's not a company. I think it is closest in description to something like Wikipedia. We can see everything on Wikipedia. It is a composite view that is constantly changing and being updated. We can also track those changes on Wikipedia. On Wikipedia, it is an open platform that stores words and images and the changes of that data over time. On the blockchain, you can think of it as an open infrastructure that stores many kind of assets. It stores the history of ownership and location of assets like the digital currency Bitcoin, other digital assets like a title of ownership like IP. It can be a certificate, a contract, real world objects, even personal identifiable information. There are of course, other technical details to the blockchain, but at its core that is how it works.

Blockchain technology is also referred to as a distributed digital ledger in which transactions are recorded chronologically and publicly. In the ledger, records of each and every transaction are immutable. If a mistake is made, you must post a compensating transaction to correct it - no updating or deleting is allowed. Blockchain also applies digital signature technology to create transactions that reduce fraud and establishes trust and accountability. Computers or nodes verify the transactions on the network and each maintains a copy of the entire blockchain. Verified transactions are then grouped into a block and added to the blockchain in a linear, chronological order. Then there are the miners, usually nodes with greater computing power. They compete for a reward to solve a complicated mathematical problem - that will provide a unique number. This number is used to link the new block to all previous blocks, and the name blockchain is referring to this "chain of blockchains". After each new block is added, all nodes update their versions of the blockchain to ensure consensus. This technology allows safe interaction to occur between parties without trust which removes the need for a central institution or a middleman.

Blockchain technology has the potential to disrupt a wide range of industries, and revolutionze the way people and busineses interact. It is an emerging way for businesses, industries, and public organizations to almost instantaneously make and verify transactions—streamlining business processes, saving money, and reducing the potential for fraud. At its core, a blockchain is a data structure that’s used to create a digital transaction ledger that, instead of resting with a single provider, is shared among a distributed network of computers. The result is a more open, transparent, and publically verifiable system that will fundamentally change the way we think about exchanging value and assets, enforcing contracts, and sharing data across industries. The applications using blockchain are almost limitless, ranging from loans, bonds, and payments to more efficient supply chains to even identity management and verification. Although we are starting to see large institutions and governments working on blockchain technology, it is the blockchain startups that appear to be leading the way. For startups in the blockchain sphere, the popular means of raising capital is through Initial Coin Offerings (ICOs). ICOs have raised almost $1.67 billion in 2017 so far, $540 million in July alone.

Blockchains have little value within a single organization. The more organizations and companies that participate and share, even competitors, the more streamlined the process will be and the greater the value. On the other hand, the current status of the blockchain industry is that we already see a power struggle, a core concept in the field of international relations. The power struggle among miners and nodes may just be the beginning; there may even exist a power struggle (and changes in the global order accordingly) between countries, such as U.S. and China. Therefore, the blockchain can be influential not only in the technical and economic but also in the political aspect as well. It may be too soon to tell, but the potential impact and implications of blockchain technology are inevitable.