What is Blockchain? A beginner’s guide to Blockchain Technology.

If you have been paying attention to the financial world, you will hear words like Bitcoin, ether, cryptocurrency and of course the blockchain. And if you are wondering what all these new terms mean and how they work, then here is a small preview of the blockchain technology which runs all the Cryptocurrencies.

What is blockchain technology?

It has been the consistent efforts of every service provider to improve the efficiency and affordability of their services. And this is the same for the financial sector as well. The need for a cost-effective and efficient way to offer financial services is what has triggered the debut of blockchain technology.

There is no specific date or time when the blockchain technology came into existence. Thanks to Satoshi Nakamoto, it was in the year 2009 when the chance to send payments anonymously without any third party interference came into existence. The technology was initially used for transferring bitcoins and similar Cryptocurrencies.

How does this work?

Let us now try understanding the working of a blockchain with a simple example of a medical record in a digital platform. Every entry in the register will have a date and time stamp on which the record is created. And these entries cannot be modified later for the diagnosis cannot be tampered with, and each of the records is related to the previous ones.

The information on this medical record is accessible to only two parties – the doctor and the patient. Unless the information is shared by either of them, it cannot be accessed. The doctor or the patient can share their access to others like the specialist.

Now what we described here is a blockchain where the doctor and the patient resemble the two parties involved in a transaction. While blockchain allows the users to access anywhere and at any time, allowing them to send money or receive money anonymously, it requires you to have the key to accessing your account.

The key is what you share when you transfer through the blockchain. This is how the transfer of bitcoins happens.
When the Bitcoin is to be transferred, the sender shares the keys electronically indicating the section of the blockchain where it is stored to the receiver. The receiver can now use the key to access the part and thus becomes the owner of the financial value in that section.

Each of these keys has a time stamp which helps in eliminating the possibility of double spending. Unlike the physical access keys, these cannot be stolen, and hence it establishes the reliability in using the blockchain for the financial transaction.
We have already been using the internet as the decentralized platform to send or receive information. And Blockchain offers the same if not more security in money transactions.

One can refer to the blockchain technology as a database shared to all, containing entries that are encrypted and has to be confirmed. In simple words, it is a Google document that is verified, encrypted and shared, in which every entry has some relation to the preceding ones.

The technology offers you the chance to make secure and encrypted transactions which can be from simple financial transaction to sharing of shareholder records.

While blockchain is currently being used more for financial purposes, we are fast approaching an era where it finds broad applications in multiple disciplines.

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