The need to be familiar with the latest technology and its impact on global markets and business is very important. Many new technologies like the internet, mobile technology, cloud computing, social networks, e-commerce, and mobile apps are disruptive and present huge opportunities for businesses that are willing to adapt. Unfortunately many of these technologies are still in early stages of development and growth. They’re not mature enough to compete with established players in the industry. This means that businesses are forced to react with innovation and adaptation. The question is “In what ways are new technologies impacting your company and business?”
The most influential and promising new technology is called blockchains. Blockchains are a highly efficient, safe, and transparent way to transact through the net without the traditional forms of money, credit cards, and bank accounts. Blockchains are made up of a network of servers instead of a single point of control like blockchains in conventional servers. As a result, the technology has the potential to completely replace the need for financial institutions and their users.
How does the term “blockchain” sound? Well, let’s break it down into its most basic terms: A “block” in this context is a group of transactions, like a phonebook in a phone network. A “blockchain” is composed of a network of computers instead of a single point of control. As a result, the technology has the potential to completely replace the need for financial institutions and their users.
In the simplest terms, the basic protocol of the blockchain consists of a collection of computer networks that together form a self-enforcing transaction protocol (also known as the ” Byzantine Consensus”). Every transaction is recorded in a block, which is then agreed upon by a group of validators (computer specialists who control the blocks) before being applied to the ledger at block height. The ledger is maintained by a computer program that is programmed by the developer(s) of the ledger themselves. The purpose of these ” Developers “is to make certain that the ledger and the transactions are well-behaved and secure against attackers.
The developers of a ledger also work together with a special kind of “miner”, or the individuals or businesses that actually mint the new coins (called “minting agents”), and they ensure that the new blocks are applied to the ledger in a correct order, and that no improper transactions occur. This second point is important to understand; without the need for a central administrator, the ledger becomes a decentralized system, rather than a censorship-free distributed ledger. Because the transactions are all made in “blocks”, there is a limit on the number of total transactions that can take place during any given hour. This, in effect, reduces the risk of ” overflows”, where large numbers of transaction requests flood the network and cause problems with network scalability.
After this “maintenance” process is completed, then the blocks are added to the “chain”, which is a distributed database that contains the whole chain. At this point, thechain forks, creating new chains and adding to the existing one. The developers continue working on the forks, adding to them, fixing problems, and adding more features. In order to complete the additional work that has been started, the developers create “addresses” that people can use to pay for the transactions they have performed. These addresses are kept separate from the actual transactions themselves, so that if someone adds a contract but does not pay, his transaction does not count against the ledger’s ledger balance.
So, we know what a “blockchain” is, and we know what it does; but how does it work? The developers use a “proof-of-work” system to guarantee that the work they are doing is “real”. A proof-of-work system is simply an agreement between a group of developers that if a specific number of blocks are produced, then the developers will get a certain amount of money for their work. This proof-of-work acts as a guarantee that the work is actually being done rather than just sitting there in a ledger. The proof-of-work system prevents cheating by allowing people to easily see if the blocks being produced are actually real blocks created by real programmers. Because the blocks are all consistent with each other and with the rest of the chain, this guarantees that no two blocks are different.
What does the “chain” actually look like? One difficulty for people who are unfamiliar with this technology is not being able to visualize what the different blocks look like. Blockchains are actually collections of different transactions that happened over time. Some chains are very thin, containing only the most recent block; others may be much thicker, with chains stretched across time. To learn more about the technology of the blockchain, visit Coindesk.