What is Blockchain?
A blockchain is a shared digital leader or database that securely maintains a growing list of transactions, whether it’s an exchange of Bitcoin or government-backed currency. You can look at a blockchain in a similar way as a spreadsheet, except there are a few qualities that make this concept more unique in comparison to a traditional database.
This list of the best blockchain courses will set this concept apart by stating how it’s built around a P2P system (peer-2-peer) where every single transaction added becomes a part of the chain (hence the name). Blockchains can only be updated by a consensus between participants that have access to the system. Once new data is entered, it can’t be erased.
While this system will be useful in the future, in its current state, there is a possibility of severe bugs in the software. Blockchains shouldn’t be advertised as a catch-all solution either as it has an issue with greater transactional throughput and scalability. However, that hasn’t stopped hundreds of companies from trying their own system.
Bitcoin Popularity and Economics
Digital currency (or cryptocurrency) like Bitcoin has become widely popular because it allows for payment transactions over an open network using encryption methods that don’t expose the purchaser. Other cryptocurrencies like Ether gained significance in 2013 and opened new ways for citizens of different countries to participate in border monetary exchanges.
Bitcoin is the most famous and the most trackable cryptocurrency and was initially coined by Satoshi Nakamoto in 2008. He wrote on the genius of this electronic cash and how users didn’t need to go through a financial institution to pay for goods. At its peak in 2017, Bitcoin had reached $19,783 but has since dropped to $7000 in 2020.
Since there is no institution backing cryptocurrency, its economy is based on supply in demand in the same way an eBay auction is. Since there is a limited amount of Bitcoins in circulation, new Bitcoins will decrease its rate. It’s actually backed by centuries of economics similar to the US dollar, although the federal reserve no longer supports the US dollar.
Blockchain Security
What entices investors is the security of a blockchain network. If someone wanted to hack a bank, the user would only have to hack one system. However, hackers who want to steal Bitcoin would need to decrypt every single computer on the network – a far more difficult task. While Bitcoin isn’t unhackable, these systems are more difficult to penetrate.
The larger the scale, the easier it is to prevent hacks. Keep in mind that while blockchain networks are secure, the applications running them may not be. If you want to keep your Bitcoin wallet safe, be sure to check the security of the software that encrypts your information, especially if that application is a monetary exchange software.
Scalability Efforts
As mentioned, one of the most significant issues facing blockchain and its growth is how difficult it is its scalability (or the ability to complete transactions in real-time). Bitcoin and Ether have seen these issues first hand because they compete with payment networks that are 100 times faster. If cryptocurrency addresses latency issues, it could become unstoppable.
One of the ways programmers are addressing this is by increasing transactional throughput. Sharding, which splits a blockchains entire network into smaller partitions, can male this process faster because it’s no longer contained in a single shard. Most blockchains still authenticate all records at once, which can elongate the process by minutes.