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Since its inception in 2008, Bitcoin has changed the way we view money in the digital era.
And while it’s yet to be seen whether or not Bitcoin will be more than just a fad
kind of like pogs or beanie babies
one aspect of it, the blockchain is being heralded as the most important invention since
the Internet itself.
When a new transaction is made with bitcoin, that transaction will broadcast to the thousands
of nodes that comprise the bitcoin network.
Bitcoin miners work to process the transactions, adding them to the ledger.
All of these nodes have copies of the same ledger and all see the same transactions.
Once a certain amount of transactions have been added, they become a block.
That block, protected by cryptography, connects to the previous block, which is connected
to the previous block, all the way back to the first bitcoin transaction ever
creating a chain of blocks
hence the term blockchain.
Because many people have access to these ledgers, and are constantly cross checking them, it’s
difficult for a hacker to tamper with them since changing one would create a discrepancy
within the whole network.
In fact, it’s the decentralization of information that makes this system so brilliant.
If a hacker breaks into a banking system, for instance, they could do some serious damage
to our bank accounts.
But more importantly, the blockchain creates a concrete record of transactions and agreements
that everyone can trust and believe.
It’s a system that promotes security through truth and transparency.
The efficiency of the blockchain, when applied to our financial systems, could potentially
save banks $20 billion dollars a year by 2020.
The stock exchange even got its first taste of blockchain technology last year when the
NASDAQ made its first trade using the system.
The blockchain is even being tested as a means for online voting, a move that could eliminate
voter fraud and government corruption.
So does this all sound too good to be true?
Well yeah it kind of does. I mean, blockchains still have a long way to go before they replace
our huge financial systems.
But it’s clear to see that this model has the potential to really help us do some cool stuff