CAPE TOWN - Blockchain, Cryptocurrencies, Bitcoin and Ethereum have taken the world by storm and have become popular terms on the Internet. However, not many people understand or know what it is.
Are you intrigued by the blockchain system and what cryptocurrencies can offer you in terms of investment?
Here are some things you need to know to help you understand more about blockchain.
What is blockchain?
The inventor of blockchain is a person or group of people known as Satoshi Nakamoto.
The blockchain is a system that allows consumers and suppliers to connect directly, removing the need for a third party such as a bank when making a transaction.
So it is seen as a public ledger where transactions are recorded and confirmed anonymously. Additionally, these transactions can't be altered.
It is seen as a self-auditing ecosystem of a digital value, as the network records every transaction that happens in ten-minute intervals.
The technology can work for almost every type of transaction involving value, including money, goods and property.
According to a survey by the World Economic Forum’s Global Agenda Council, only a very small proportion of global GDP (around 0.025%, or $20 billion) is held in the blockchain.
Out of around 3.77 billion people that are connected to the Internet, only 0.5% of the world’s population is using blockchain today.
However, the global blockchain market is expected to be worth $20 billion by 2024.
How does it work in practice?
1. A blockchain is hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.
2. In the case of Bitcoin, blockchain stores the details of every transaction of the digital currency.
3. When one wants to send money across to another, the transaction made in the network is referred to as a “block”.
4. The block then has to be validated by other nodes in the network.
5. Computers connected to the blockchain network are called “nodes” that make up the blockchain.
5. Every node is an “administrator” of the blockchain and joins the network voluntarily.
6. A copy of the block is then made and it then joins a chain, which gets downloaded automatically upon joining the blockchain network.
7. This chain is transparent data that is embedded within the network as a whole, by definition, it is a ledger that is public.
8. Similar to a Google doc, all participants within a network see all changes to the ledger.
9. The ledger is constantly updated and each participant has their own copy of it.
10. Once the transaction is recorded and joins the chain, the money is then sent.
11. Blockchain could help to reduce fraud because every transaction would be recorded and distributed on a public ledger for anyone to see.