Christopher Lewis - Blockchain : your comprehensive guide to understanding the decentralized future

Whether or not you come from a financial background, this topic is going to spark some interest in you - that much I can safely assume! However, before we proceed to learning about Blockchain, it would be useful to first learn a little about Bitcoin. If you don't have a clear understanding about Bitcoin, this is your chance to grasp the idea.

Understanding Bitcoin

Bitcoin, in simplest terms, is a digital currency. Unlike regular currency, Bitcoin isnt printed or minted, neither paper nor metal; it is not physical currency that you can hold in your hands and carry in your wallets. Rather, this is currency that is both created and stored electronically.

But no, it isn't monopoly money that has no value! Bitcoin carries as much significance as real money, only that it is physically intangible to you. You can use this form of money to buy and pay for stuff, but only electronically. Someone - its still not sure who despite claims all over the world - using the alias Satoshi Nakamoto, was the first person to coin the concept back in 2008 (ahem).

With Bitcoin, a transaction takes place directly between two people. It is just like if you had paid $5 for a cup of coffee to your favorite coffee vender; except, in this case, you are not handing over a $5 bill. You would be sending the money to that person via Bitcoin a digital currency, and the transaction is direct, just like passing the $5 bill from one hand to another. There won't be any intermediary between you two to deduct a portion of the $5 as payment for services.

A little confused? Here's more!

If you have chosen to pay for something, or buy something via electronic funds - not Bitcoin, but other means of digital transaction - there are a number of formalities to go through. Each transaction will have to go through several banks, especially if you are spending internationally. More often than not, each transaction takes as long as several minutes to several hours to process, and thats a long time to wait if you are in a hurry.

With Bitcoin, you can spend anonymously. If the two parties in a transaction agree on a price and sale, there is no need to spend time proving your identity and competency. Through mobile apps or computer apps, you can send and receive money anonymously, paying without having to go through your bank.

After the first introduction in 2008, Bitcoin gained popularity fast. Individuals and small businesses started preferring Bitcoin to other mediums of currency because of the absence of an intermediary. International credit cards are not needed for Bitcoin transactions, which made the entire process easier and faster.

Since there is no intermediary in between to mediate, you would be sending your Bitcoin payments to someone completely anonymous. But even if you trust Bitcoin, do you trust the person that you are sending your payments to? This may be someone who is just a name or a number to you, sitting is another country, a person who is completely unknown, receiving a direct payment from you!

So why would someone trust this method of payment? Enter the Blockchain.

What is Blockchain?

The Blockchain is a ledger that helps keep track of all confirmed transactions involved. However, this is not a personal ledger that will track your transactions, but a shared public ledger that automatically includes all the transactions occurred over the whole network. This means that anyone who wants to can have a view of all transactions that have taken place across the network.

You cannot erase your own transaction information from Blockchain, neither anyone else's. You can only write in this ever-growing network of data records that has a record of every transaction ever made. All the data records are concrete and cannot be tampered with. For example, no one can edit or delete any transaction from their Bitcoin wallet or from anyone else's; once included, that information is forever there to stay.

In the absence of an intermediary that you can trust, i.e. a reputed bank or any other financial institution that plays a role in our transactions - it is the concept of Blockchain that can put the security back into this process. One can also flip this around and also consider the many instances in financial history where the third party themselves were attempting to carry out fraud in transactions, and so Blockchain eliminates this risk.