WHAT IS BLOCKCHAIN?

BLOCKCHAIN FUNDAMENTALS...

Even if you are using the Old keypad phones, I am sure you have heard about

Blockchain,

Web 3.0,

NFTs,

Bitcoins,

DAOs.

So many new terms. It's time to understand them all.

What is Blockchain?

Blockchain is a database that is Decentralized and Digitally Distributed and not managed by a single company. By making a peer-to-peer database Blockchain is managed by multiple people.

Why do we even need Blockchain, which is that complicated?

In one word, to build the faith and to reduce the compliance charge. Blockchain allows digital transactions and records digital information. As this technology is not managed by any company so nobody can edit any information which itself builds trust in the blockchain.

let's understand this with an example -

Imagine you are traveling around the world and at some point, you are out of money. You ask your dad to send you some money. Let's assume 15000 bucks.

Now your dad instantly checks out his bank account and transfer the money. Then he texted you that he wired you the money and you will get it soon.

Now let's introspect what happened behind the scene...

Your dad send you the money and you got it, but the bank worked as a mediator. The moment your dad sends the money the bank registered the transaction, both the account number and date and time of the transaction. Writing the whole transaction from person X to person Y with a date and time has a cost. That is the bank's infrastructure cost. Because anytime anybody wire money to someone then the bank has to pay their server powers, human powers, etc. Which bank takes as transfer charge from the sender. In India, digital payment still is not that much penetrated. So to encourage digital payments, banks still charge noting from the sender. Whenever a huge number of people will start using digital payment then definitely bank will charge some percentage. Which they already do in developed countries.

Now understand the problem-

If your dad gives you 15000 bucks hand to hand then it's cost nothing. Then why can't we do the same online? Why can't we send it directly to anyone?

Because most of the time we send money to random people. We use online payments while buying online products too. So we want to keep a record. Here come TRUST ISSUES.

By keeping the record, banks and other mediators build that trust for each and every transaction we made.

But can we trust them fully? As all the banks and other mediators are owned by someone so can't trust them fully. Our transaction is not private anymore. Anybody can check it. So here comes the BLOCKCHAIN.

Initially, blockchain was made to serve as a mediator for every transaction we made to build trust. All the cryptocurrencies are made on this blockchain technology. Nowadays even many banks are adopting this technology.

And how does Blockchain do this?

For every transaction, blockchain makes a "block". Which generates a unique identity. Nobody can track that and by adding all the blocks blockchain makes a "chain".

There is a lot more than wiring money we can do with blockchain technology.

• personal identity security
• personal data security
• NFT marketplace
• Supply chain logistic monitoring

So, as I said earlier, every company has a server or multiple servers. So they keep the data within their servers and they can easily manipulate that. But blockchain runs at multiple PCs of multiple people spread across the world.

Now the next masterclass question is how do we know every transaction is real?

By checking the record of every block of a chain that is processed and verified.

But how can we still trust it? Who runs the verification?

That is the next topic. Will update it in the next 3 days. Follow me to know more about technology, education, and personal finance.

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