Blockchain technology in 3 minutes

Buzz words like ‘bitcoin’, ‘blockchain’, and ‘cryptocurrency’ are everywhere. Blockchain has begun to reshape business models across many sectors. Blockchain innovation has started to impact government infrastructure, citizenship, voting, and health. Smaller countries with more cohesive power have already taken dramatic steps to decentralize their infrastructure and systems.

The world economy has become more connected every year and globalization has changed the lives of people and communities significantly. The fast-paced changes in technology and the increased mobility of commodities, money, and people have strained our current systems considerably. Blockchain technology is one of the many innovations that both enables new levels of globalization and helps some of our existing institutions reinvent themselves.

It is time to take an in-depth look at blockchain technology, and how you can take advantage of its potential. The popularization of blockchain has shrouded the sector into the realm of alchemy. Attaching the words ‘tokenization’ and ‘blockchain’ have spontaneously transformed the mundane into the magical.

1. Title

The title for this book, written by Tiana Laurence, is: Introduction to blockchain technology - The many faces of blockchain technology in the 21st century. The content of this book was peer reviewed by several blockchain specialists, from around the world.

Blockchain is a technology about digital information (the “block”) stored in a public database (the “chain”). A blockchain is a public and widely copied record of all the transactions that have ever occurred on a blockchain. This record is often referred to as a ledger, like what a businessperson would use to keep track of sales and inventory. A ledger within blockchain is a record of events and transactions that have occurred since that blockchain’s inception to the present moment. The record is ever growing. As new transactions occur, they are written into the record and replicated, validated and time-stamped.   

2. The basics

Blockchain is a combination of old technologies that have been structured in a new way. It has become an omnipresent term that encompasses a social promise and a new technology. Originally proposed as a solution for Bitcoin's cryptocurrency record keeping system, blockchains are now used to store the records of all types of applications. Therefore, professionals need to learn more about the key technologies that are used to create a blockchain and the network that supports it, including cryptography, ledgers and public witness.

Blockchain has begun to reshape business models across many sectors. Blockchain innovation has started to impact government infrastructure, citizenship, voting, and health. Smaller countries with more cohesive power have already taken dramatic steps to decentralize their infrastructure and systems.

3. Summary

The world economy has become more connected every year and globalization has changed the lives of people and communities significantly. The fast-paced changes in technology and the increased mobility of commodities, money, and people have strained our current systems considerably. Blockchain technology is one of the many innovations that both enables new levels of globalization and helps some of our existing institutions reinvent themselves.

Many expect that blockchain applications will come in place of centralized systems. Centralized systems are everywhere people need to trust a counterparty and don't have the resources themselves to do so independently. An easy way to identify a place where blockchain technology may be applied is to look for areas where a middleman is needed to facilitate trust. Trust is essential for things such as: the transfer of money, voting, land records, IP rights, and identity. Blockchain software can be programmed to take the place of the middleman by becoming the trusted record keeping system.

The concept of a blockchain network is better understood by first breaking it into two parts: blockchain and network and defining the two separately. Blockchain networks do not have a central server to coordinate and facilitate communication among computers. It is a peer-to-peer network and each node communicates directly with other nodes.The more nodes there are, the more secure the network is. But this security comes at a high cost.

All computers in these networks are operating on a shared rule set that lets them know how to update transactions and collaborate with other nodes. An important part of their collaboration is the agreement on the current and past state of the records. They must agree on the validity of transactions.

Figure 1 What is blockchain?

The second-generation applications of blockchain technology are exciting for their many commercial and social uses. Blockchain applications are primarily known as a ‘back end’ technology and are distributed databases. Understanding these new and emerging technologies is essential because they are leading to changes in government and financial technology, and online security. The next generation of applications of blockchain are as varied as any application of software and may already be affecting your life.

4. Target audience

All professionalsthat are confronted with centralized systems, in their profession and also in their daily lives. Key for centralized systems is that its users need to trust a counterparty. Blockchain technology may take the place as trusted record keeping system and take the role asthe middleman to facilitate trust.  

5. Scope and constraints

The scope of blockchain isthat it helps innovation in the many places where it has a key part in decentralizing existing infrastructure and systems that have become complicated and slow. It will then continue to impact government infrastructure, citizenship, voting, health, etc.  

Strengths:

 - Costs of upkeep are relatively low, and new generations blockchain applications are scalable to operation.

Constraints:

- It is a centralized system; this may make it prone to corruption and fraud.

- The reaction from some governments may be harsh to protect the status quo from disruption

- New legislation is required; governments need to redefine the traditional ideas of citizenship, anticorruption, business legislation, voting, etc.

6. Relevant reading

The corresponding courseware and exams are coming!

Introduction to Blockchain Technology

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