Previously, we went into some detail about what a cryptocurrency is, along with just how it functions when it's backed by a public/private blockchain.
But it only really answers half of the function, the second being just how blockchain works, the kind of advantages that it provides for users, and why there has been such a marginal amount of discussion over it in comparison with crypto assets.
Not all blockchains are created equal, and even with this in mind, it's an innovation with a potential that is only now being tapped into. So let's get into the process of answering the question - what is blockchain?
While some of the first iterations of blockchain that people have likely heard of coming from Bitcoin and Ethereum as just two examples, the theory is actually nearly 30 years old. Proposals that made use of cryptographically secured blocks of information were first proposed by Stuart Haber and W. Scott Stornetta back in 1991.
So what even is a blockchain? Much as Haber and Stornetta put forward in '91, the technology allows for the creation of a distributed public ledger. This ledger allows for the highly secure storage of information on an increasing number of 'blocks,' which are held sequentially by cryptographic chains to past and future blocks; hence - 'Blockchain.'
This is the theory behind it, but the reason that we can often think of it as being synonymous with Bitcoin is that that was how it was first implemented. The publication of 'Bitcoin: A Peer to Peer Electronic Cash System,' by Satoshi Nakamoto.
While Bitcoin and Blockchain have a link, blockchain varies depending on the developer/s. But in a more broad way, blockchain operates as a wholly autonomous peer to peer solution which can function in a trusted way between users. This is what makes it a special kind of innovation: this trustless ecosystem means that no third party entity is needed in order to make sure it runs effectively.
Depending on the kind of 'Consensus' that the blockchain uses (a method of validating transactions on-chain), whether it's Proof of Stake (virtual shareholders in the ecosystem), Proof of Work (Mining) or otherwise, there are incentives for these users to get involved in supporting the network.
It's this cryptography that makes it so secure, information that is validated by staking, mining, etc, is then added to the latest block. Once that happens and it's added to the cryptographic chain - it's immutable. Meaning that no outside entities can delete or alter it in any way.
And it's this part that brings us to why it holds such intrinsic value to users, companies and governments as well.
It's no understatement to say that we're just scraping at the tip of the iceberg of applying blockchain technology. But now we're seeing big names start to put it to work for their ecosystems.
The first being JP Morgan, and while it's CEO, Jamie Dimon, has been more than an overt critic of Bitcoin, the same isn't so with blockchain. JP Morgan has put blockchain to work as a private ledger with 'Quorum.'
The second, while contested, would be Facebook's Libra. And while there is serious debate over the function of Libra as a blockchain, the argument remains the same - blockchain technology is gradually being picked up by companies as an innovative and, importantly, money-saving solution.
For industries like Fintech, Regulation, Legalease, shipping, etc. Blockchain has the ability to readily store confidential information in a much more efficient way than any third party could. By introducing some kind of private ledger, any company can effectively outsource regulations, paperwork, finances, among other things.
We've seen examples of this on a local governmental level; states like Deleware have actually been making use of the technology for documenting and filing sensitive data as one example.
We'll be digging far deeper into just what blockchain allows you to do. But in the meantime, blockchain technology and their associated cryptocurrencies do have the quality of whipping up a debate. So let us know your thoughts on the technology below!