What is a blockchain?
The Blockchain is at the heart of cryptocurrency. It is a new way to maintain data . The application of blockchain technology has created a financial instrument that can purchase goods and services. Blockchain Technology is now a part of daily life for us all, so lets understand what it is.
Where does the blockchain exist?
Is it really incorruptible?
Is there a limit to its value?
Understanding the fundamental definition of the blockchain is at the heart of understanding blockchain technology. Blockchain technology and its applications involving digital instruments of shared value, can purchase goods and services and be traded between individuals.
I like to conceptualize the blockchain this way. Let’s just look at the word blockchain. It is a compound word consisting of ‘block’ and ‘chain’. The block is a compilation of constantly expanding data in a file folder. Constantly expanding data can be envisioned as keeping a count of every breath you take, your average heart rate each day, and a record of your blood pressure each day of your life. Once the data is recorded and you verify that it is accurate, it cannot be edited. A copy of the data is then distributed to everyone you know. This process makes the data in the file folder validated and incorruptible. Because the same data validated by you is in the hands of others, there is no way the data can be compromised unless every copy is changed. The size of the file folder is predetermined. For our example let’s use the size of 1 day’s worth of data. One day’s worth of data is equal to one block of data.
The chain portion of the word blockchain can be defined this way. All the data collected in each block is about the same entity. In our example that entity is you. The blocks of daily data are linked together in chronological order. This grouping creates a sequential chain, comprised of blocks of information about the same entity. This process of gathering data about one entity, compiling that data into a block, and maintaining it in sequential order has been given the term ‘blockchain’. The hardware and software combination that digitizes this objective is referred to as ‘blockchain technology’.
Now let’s apply that definition to cryptocurrencies. In our age of digital innovations, the ability to create and maintain a blockchain of incorruptible data has value. The value of this data can be used to purchase goods and services from others that agree on the value of the data. The digital tool that is used to purchase goods and services has been given the name ‘cryptocurrency’. The data contained in a block of cryptocurrency is an incorruptible ledger of transactions. Every purchase and sale that uses a particular cryptocurrency, eg. Ethereum is recorded in its corresponding blockchain. Just as there are a variety of tools needed to build a house. There are a variety of cryptocurrencies available to purchase goods and services, more than 4,000 at the time of this writing.
Some names you may have been exposed to are Bitcoin, Monero, Ethereum, and Tether. A cryptocurrency is an instrument of digitized value that can be used to purchase goods and services. The most valuable cryptocurrency is Bitcoin. Although there are still investment opportunities in other cryptocurrencies that have recorded phenomenal gains that you should not miss out on.
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