Crypto-what?
You’d probably be forgiven for recoiling in terror at the opaqueness of technical jargon used to describe this new technology called blockchain. We’ll start by explaining what blockchain is before getting into how this technology could change the world. Come and visit our website search it on MetaEdge website you can learn more.
Blockchain is, in its most basic form, a digital recorder of transactions. These ledgers have been used over many centuries to keep track of purchases and sales. It records credit and debit transactions between users, which is essentially the same function as traditional ledgers. That’s the fundamental idea of blockchain. However, the only difference between the two is who owns it and who verify the transactions.
A traditional transaction involves a type of intermediary who helps facilitate the payment. Let’s take Rob who wants to transfer PS20 money to Melanie. The option for Rob to give Melanie money is to either cash it in the form a PS20 note or to use an app that allows him to send the money directly into her bank account. A bank serves as the intermediary to verify transactions in both these cases. Rob takes money from a cash machine and the funds are checked by the app after he transfers the money digitally. The bank determines if the transaction should proceed. Rob keeps the records of any transactions and it is also responsible for maintaining them. So, basically, the bank has control and holds the ledger. Everything flows through it.
Rob must feel secure in his bank. Otherwise, it would be a risky decision to put his trust in them. The bank must be confident that he will not be defrauded, his money will not go missing, it will not steal his cash, and that he will not become a victim to fraud. This trust is the foundation of almost all aspects of the monolithic, multifaceted finance industry. It was so important that, even though it was obvious that some banks were irresponsible with their money in 2008’s financial crisis that they needed to be rescued by the government (another intermediary), rather than risking the destruction of any remaining trust by letting them fail.
Blockchains are unique in that all of their operations can be done decentrally. A blockchain does not have a central clearinghouse, as a bank would. There are also no central ledgers held by any one entity. Instead the ledger is distributed among a wide network of computers (called nodes), each one of whom has their own copy of the whole ledger. A piece of software, called the peer-to–peer (P2P), allows these nodes to be connected. The client synchronizes data among the nodes and ensures everybody has the correct version of each ledger.