What is blockchain
The blockchain is similar to a large spreadsheet file with all rows of transactions. Each block chain participant shares the same spreadsheet and everyone has an exact copy of the original. In addition, each participant is able to add a new row with a transaction.
The first and most famous blockchainproject is the bitcoin. The bitcoin network allows users to send and receive bitcoins. Through market forces, bitcoin has now also gained financial value.
In 2015, the Canadian programmer Vitalik Buterin launched the ethereum network. This is the most popular block chain for launching decentralized applications (DApps or tokens). In addition to bitcoin and ethereum, many alternative blockchains have been developed which in many cases are derivatives of these two largest.
How does the blockchain work?
Many current databases, such as bank money, miles, etc., are managed and controlled by an authority. This is called centralized management. The blockchain is different. Each block chain participant can view the database and monitor for fraud. The blockchain is therefore decentralized. Its advantage over centralized institutions is that people no longer need to rely on a single authority. In addition, intermediaries (partly) become redundant, which can save a lot of time and money. An example is a purchase contract of a house. In the future, this may be recorded in the blockchain and transferred to each other without intervention from a broker and notary.
What is possible with blockchain?
Bitcoin is seen as a means of payment and storage of value, which is similar to gold and silver. In addition, the ethereum has made it possible to write self-executing contracts (smart contracts). Many processes, where there is still a need to rely on an intermediary, can be automated. The blockchain can ensure that the physical signing and sharing of contracts is now also recorded in the blockchain. This not only saves time and money, but is usually also safer. In addition, the blockchain can help with data storage and cryptocurrency payment of employees worldwide, without high transaction costs.
Types of blockchains
Four types of blockchains are distinguished. These differ in who determines which participants are allowed to join the block network, who can carry out transactions, and who approves transactions. A consortium lockchain is managed by a group of companies with specific access rights. Semi-private blockchains have one company as administrator. This determines who is allowed to the blockchain network. Private blockchains have one organization that determines who is participating. Public blockchains are accessible to everyone. There are no access rights, users remain anonymous and all transactions are public. Cryptocurrencies such as the bitcoin belong to these blockchains.
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