When you’re exploring the possibilities afforded by Bitcoin, as well as the many other options in cryptocurrencies, one term that you will likely see repeatedly is “blockchain”. This is an important term to be aware of if you have any interest in trading and investing in Bitcoin and altcoins, which are cryptocurrency alternatives to Bitcoin. Blockchain is the technology behind Bitcoin, and it allows the cryptocurrency to be utilized as such.
Blockchain: The Basics
A blockchain is a public record of every Bitcoin transaction ever made. As transaction blocks are completed on the chain, the chain continues to grow. Blocks are added chronologically, and every computer that is connected to this network receives a copy of the blockchain (the computers are referred to as nodes). This ever-evolving blockchain serves as an entirely comprehensive record of the transactions made for a particular cryptocurrency.
What makes blockchain so interesting as a technology is the fact that, after downloading the proper software, anyone may verify transactions that have been recorded on the ledger in an autonomous manner. This process of verification is known as mining, and miners are integral to the original blockchain concept with the Proof-of-Work algorithm. Mining is done without the need for a centralized entity; the decentralized nature of cryptocurrency is one of its top benefits.
A Little History
Blockchain technology began as a philosophical concept with the intention of protecting independent communities from societal corruption. Decentralization was recognized by the pioneers of blockchain as a key factor in creating true security for such communities. The objective was to create a system of currency that could be protected without the need for centralization. As those at the forefront of this revolutionary concept worked to transform it into a reality, Bitcoin was created.
Enter Blockchain 2.0
As the demand for Bitcoin increased, Blockchain 2.0 platforms were developed. One example of such a platform is Nxt, which provides more features on the blockchain and thus offers even more value to users. These innovative features include voting systems, the ability for users to create their own currencies, and a decentralized exchange right on the blockchain itself.
Another platform that characterizes the next generation of cryptocurrencies is Ardor. Scheduled to be released in the third quarter of 2017, the Ardor platform will allow users to set up their own blockchain with the features on Nxt, which they can use for their projects.
Blockchain is the foundation on which cryptocurrencies are able to function. This technology is growing to be widely embraced for its capacity to instill a true system of checks and balances in terms of currencies. Developments are constantly being made to add potential use cases to this technology and it will be interesting to see how this is used in the future.