What is blockchain : As the name suggest its a chain of blocks which is revolutionizing business transaction.
As simple as that right;Block chain is one of those hard to understand concepts,because it is based on cryptocurrency,encryption and networking.In this blog I will try to give an idea of what Blockchain actually is,but lets go first and find the history of blockchain.
History of blockchain :
To understand the history of block chain,we need to understand what Bitcoin is.Most of the people think bitcoin and block chain are synonyms,but blockchain is the path and bitcoin is the end product.So if we are able to understand what process is we can apply it for other outcomes.
As per Wikipedia : Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management, rather than relying on central authorities.
Confused : Let me present a scenario. Imagine their are three friends A,B and C.
A is having 100 Rs with him and B, C are broke.In normal scenario if A wants to give money to B/C he will be needing a third party( a bank) which will process a certain amount of fees and A will not be knowing what ledger(account),bank is maintaining. In short he will not be able to track his money.
When bitcoins comes in to picture everything is linked that is their is no third party,The process used by bitcoin that is blockchain maintain a record of each transaction linking them in sequence and stores this records in a digital ledger,which is transparent,practically impossible to tamper.
So bitcoin is nothing but a virtual currency founded in the fall of 2008.
As per legend Satoshi Nakamoto ( No one knows who he is) began working on the bitcoin concept in 2007.While on record he/she is a person living in Japan.But on Aug 15,2008 – Neal Kin, Vladimir Oksman, and Charles Bry file an application for an encryption patent application. All three individuals deny a connection to Satoshi Nakamoto, the alleged originator of the Bitcoin concept and on Aug 18,they register bitcoin.org.
On Jan3,2009 the genesis block is mined:
So what do you mean by mined and who are miners???????
In simple terms users of bitcoins are miners.
Come back to the scenario explained earlier : (This will be little difficult to grasp,but i will try to explain as simple as possible)
In normal scenario when A wants to transfer some amount to B,they will require a third party to oversee the transaction,that third party would add it to their ledger and oversees the transfer of funds.Since we have understood that Bitcoin works as a decentralized form of currency,to validate the transaction their should be someone not related to the party and who can update the ledger and those persons who update the ledger gets rewarded with Bitcoins and termed as miners.
It sounds easy right;someone from the network deemed a miner,users software in order to verify.Wrong,approving transactions requires significant computing power.To compensate for the use of electric-city and bandwidth miners are given incentive to approve transactions with a reward of bitcoins.(On Oct 5 2009, an exchange rate was established the value of a Bitcoin at US$1 = 1,309.03 BTC, using an equation that includes the cost of electricity to run a computer that generated Bitcoins).
With each finalization of the transactions,the block is connected to the blocks that preceded it.Each linked group of blocks taken as a whole comprises what is known as Blockchain.
Bitcoin started popularity in 2013 when it came to be seen as a legitimate currency for startups. When price of Bitcoin reached all time high,it drew suspicion from Federal government and department of homeland security put an end to Mt.Gox(a place where bitcoin was exchanged).
While bitcoin has struggled to maintain its foothold,blockchain has gained transaction among professionals in industries like banking, government agencies,hospitals,car sharing and many more to come.
So I think now you are clear of what bitcoin means and what block chain means.
As Peter Thiel mentioned in his book “Zero to one ” : It is easier to copy a model than to make something new.Doing what we already know how to do takes the world from 1 to n.But every time we create something new we go from 0 to 1.
And as we are moving towards blockchain i think we are moving from 0 to 1.