Why is the blockchain so important?

Published: 2018-12-05

 

In the current computing world, There's always this database where information gets stored. A database is otherwise known as ledger system. Okay? A very popular example people love to use to explain blockchain is the banks so I'll do the same.

In the banking system, there's a website that is front-end, it's consumer facing so consumers go to the banking website key in their information and start to transfer funds to each other. These numbers that you punched in gets recorded in the ledger system on the back end.

So in a centralized world, All this information gets collected and consumed by the bank An entity on its own. Now in the blockchain world, it's been argued that this ledger should be distributed out. So from a centralized place to a decentralized one. We're going to share and spread the data out to decentralized places, into what we call little blocks.

Instead of having one central entity handle all the blocks, we have decentralized computers holding blocks of these information. You may be wondering, all these blocks of information, how are they organized into nice spaces. So, all these blocks of information have locks inside them. Little, little locks. In order to connect this system, what's needed to be done is to unlock the locks. which then links up into one long chain, one long chain of blocks hence the name, blockchain. In order to unlock these little locks, A computing process is required to take place. In the computer world, it's called cryptography. To put it simply, it's to unlock the locks, in order for the blocks to connect together.

Common processes normally used today are probably only two right now, that's very common. One is Proof-of-Work(PoW) where you buy big mining machines, use a lot of electricity, in hopes of getting compensated by the blockchain for unlocking and connecting blocks together. That is PoW There's also another method called Proof-of-Stake(PoS) whereby you hold a certain number of coins in order to verify the blocks and unlock the little locks to connect all of them into one beautiful blockchain, thus getting rewarded by the blockchain. Basically, that's the reason why people want to mine and also the reason why people want to stake. Because by helping the blockchain by helping connect all the messy, separate blocks, into one beautiful(organized) chain, gets you compensated.

 

Filed Under: Blockchain