Bob Pattni, Crypto Advisor on: ‘Why Blockchain Matters’
In 2008, Satoshi Nakamoto, the pseudonymous person (or, more likely according to popular opinion, group of people) who developed both The Blockchain and Bitcoin, released a whitepaper describing the software protocol behind The Blockchain. Since then, the network has grown and Bitcoin in particular has become a recognized unit of value around the globe, mostly thanks to the publicity surrounding the digital currency. Bitcoin is extremely important because it provides a mechanism for accessing The Blockchain – but it’s not the only application that can leverage the platform, and that’s another reason to consider The Blockchain as an important new technological entity in its own right.
For all of its positive publicity in recent times, Bitcoin has also been on the receiving end of some bad press, such as that seen at the time of the collapse of the Mt. Gox Bitcoin exchange. However, public consciousness and weight of opinion seems to be in Bitcoin’s favour in this and other matters. For the purposes of this blog, you need to simply remember this: Bitcoin is just a mechanism for transacting on The Blockchain, and The Blockchain is the key innovation.
The Blockchain enables the anonymous exchange of digital assets, such as Bitcoin, but it is not technically dependent on Bitcoin in any way – rather, the reverse is actually true. The beauty and elegance of The Blockchain is that it does away with the need for a central authority to verify trust and the transfer of value. It transfers power and control from large entities to the many, enabling safe, fast, cheaper transactions for all. The Blockchain is transferring power to normal, everyday people, and the massive trend for individuals to participate in Crypto Mining has been born because of the power of The Blockchain.
The mechanics of The Blockchain are new, exciting, innovative – there comes a point where you simply run out of superlatives to describe such an important advance. As people/organisations transact in Blockchain, a public record of each of their transactions is automatically created. Computers (which can be owned by anybody, anywhere in the world) verify each transaction with sophisticated algorithms to confirm the transfer of value and create a historical ledger of all activity. The computers that form the network that are processing the transactions are located throughout the world, and importantly are not owned or controlled by any single entity – this is truly ‘The People’s Transaction Accounting System’. In fact, the people in your office, or those you see in the coffee shop in a morning, are potentially some of those who own Mining computers which participate in The Blockchain as part of the process. The process is also real-time, and by dint of its use of multiple unconnected individuals, is much more secure than relying on a central authority to verify a transaction.
Written By Bob Pattni