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What is Blockchain Technology?

The Beginner’s Guide to Blockchain


If you’re just getting started with cryptocurrency, you have probably heard the term “blockchain technology” used to describe a wide variety of concepts. 

The term is, admittedly, a broad one. You’re just as likely to encounter blockchain in a white paper for a new cryptocurrency as you are in an advertisement from a major company like IBM. 

So, what does the term mean and why is it so widely used? Blockchain most often refers to a network of computers that uses a common software to order data in such a way that, after being sequenced, ensures it can’t be adjusted or tampered with by any one dishonest user.

Put another way, a blockchain creates a trusted record using cryptography. 

While most commonly associated with the Bitcoin white paper, the concept is an older one, and elements of this design can be traced to the work on which Bitcoin’s creator, Satoshi Nakamoto, referenced in the project’s founding document. 

Note: as of 2020, there remains debate over what the definition of blockchain technology should be and if and when it’s being correctly applied. 

This is due to the fact that there has been an effort to abstract the architecture of blockchains for uses beyond the ordering of transactions in cryptocurrencies. 

Some of these efforts will undoubtedly stretch the technology’s application too far, contributing to a more realistic understanding of its expected impact. 
 

What is blockchain technology


Paano gumagana ang blockchain?

At its most broad, the term blockchain describes a public records system managed by a distributed network of computers called nodes.

These nodes must constantly work to record all updates to the network. What makes a blockchain unique is that all nodes maintain a copy of the ledger.

Before diving deeper into the technology, it is important to understand the characteristics that make a blockchain work. 

Generally (and with some exceptions), blockchains aim to be: 

Auditable – Updates stored in the blockchain can easily be tracked and verified.

Distributed – Blockchains often aim to remain outside the control of a single entity (or are collectively managed by a broad set of known stakeholders). 

Immutable – Once a transaction is recorded on the ledger, it can never be changed (or if it is, it must be to the agreement of its stakeholders). 

Pseudonymous - Each user that interacts with the blockchain does so with a generated address that does not reveal their identity.

Mga component ng blockchain technology


Upang lubos na maunawaan ang potensyal ng blockchain technology, kailangang unawaing mabuti ang mga bahagi na nagpapatakbo nito. 

Upang magsimula, ang pinanggalingan ng teknolohiya ay cryptography, ang technique na ginamit para sa ligtas na pribadong komunikasyon at encryption, ang proseso ng pag-encode ng impormasyong iyon. 

Cryptography 

Ang mga blockchain ngayon ay ligtas dahil sa cryptography, ang technique na ginagamit upang ligtas ang pribadong komunikasyon at ang kilusan ng digital data.

Ang cryptography ay isang agham sa likod ng paglikha ng mga code at cypher na nagpapahintulot sa mga tao na magpadala ng impormasyon sa pribado at ligtas na paraan. 

Noong umpisa ng 1900s, ang cryptography ay pangunahing ginagamit ng militar at ahensya ng mga ispya, partikular sa panahon ng giyera, kung saan ang lihim na komunikasyon ay mahalagang paraan upang magpadala ng impormasyon sa pagitan ng mga post. 

Ngayon, ang cryptography ay tumutulong sa pag-secure ng mga paghahatid ng mga hawak na blockchain, na ginagawang mas mahusay at mabisa ang proseso ng pagpapadala at pagtanggap ng data at impormasyon.

Distributed Ledger

Sa mga blockchain, ang digital data ay protektado sa pamamagitan ng pag-gamit ng cryptography sa paraang nilikha ang maaasahang tala na pagmamay-ari at pinananatili ng lahat ng mga kalahok na tinatawag na "distributed ledger.”

Naisip bilang isang alternatibo sa mga pinagkakatiwalaang mga database, ang mga distributed ledger ay naglalayon na payagan ang mga gumagamit na higit na pangasiwaan ang pagpapanatili ng kanilang data, habang binabawasan ang pananagutan para sa mga kumpanya o entity na ngayon ay maaaring maglingkod bilang sentral na may-ari ng sensitibong impormasyon na ito. 

Dahil sa epekto na ito, mayroong iba't ibang mga industriya at samahan na gumagamit ng mga blockchain upang mag-set up ng isang pinagkakatiwalaang network upang i-streamline ang pagbabahagi ng impormasyon at ang proseso ng pag-iingat ng record, habang pinapabuti ang kanilang pagganap at seguridad. 

Smart Contracts

Sentro sa mga distributed ledger ang mga web ng mga "smart contract," kung-pagkatapos ng mga kasunduan na, kapag nai-code sa software, maaaring mamuno sa transaksyon ng negosyo. 

Ang ideya ay, sa blockchain, isang programa na naka-embed sa code ng protocol ay maaaring mabilis at digital na ipatupad ang uri ng kontrata na nagyon ay kailangan ipapatupad ng isang tagapamagitan tulad ng ahente ng insurance o tagapamagitan ng pananalapi.

Dahil ang mga transksyon sa negosyo ay pinamamahalaan ng mga kontrata sa blockchain, makakatulong ang transactional na proseso upang tumakbo ito nang mas maayos.

What is blockchain used for?


As mentioned, the idea that there are blockchain use cases beyond cryptocurrency is still new. 

This means there has been an endless number of proposed use cases for these computing networks, some more realistic and practical than others. 

Below is a list of industries that have attempted to incorporate blockchain technology with varying degrees of success.

Cryptocurrency 

Blockchain technology’s original, and still most popular, use case is to power cryptocurrencies.
In fact, some would argue blockchains are their central element, allowing users to run software that then enforces the rules around their currencies, making this data scarce and valuable.

Because of their blockchains, cryptocurrencies can be borderless, durable, irreversible, permissionless or pseudonymous. 

If you would like more information on how blockchains help power cryptocurrencies, feel free to read our ‘What is Cryptocurrency?’ guide, which offers a more extensive explanation. 

Financial Services 

Given blockchains can now govern digital money supplies, major companies have sought to extend this technology further to other types of financial services.

As such, it’s believed blockchains could solve inefficiencies in parts of the financial system – inter-bank transactions, clearing and settlements – that have typically been the domain of some of the world’s largest and most opaque financial entities. 

The idea is these institutions can use blockchain technology to cut costs, better adhere to regulation and generally upgrade the somewhat antiquated technology that helps them run.

Business Management

One of the most talked about use-cases for blockchain technology is using it to manage supply chains for businesses. 

Global trade is a trillion dollar industry, with goods and services being shipped across the world daily. In order for something to travel from one place to the next, there are multiple supply chain participants, each relying on different systems to approve and process transactions.

Blockchain technology could help reduce the barriers formed from these different systems, removing certain costs and potential points of failures along the way. 

Record-Keeping

Records today, be it health care, real estate or voting, are often maintained by centralized data centers, which brings added costs and risks to the entities entrusted with them.

By nature, this means that information is vulnerable to security breaches and can be difficult and expensive to access. 

Many industries need a more efficient and secure system for managing these records while performing and recording other complex transactions. 

This is where blockchain technology comes in, and there is some hope it could help solve these long-standing issues, offering a mechanism for recording and maintaining comprehensive records while allowing individuals to have more control over their own data. 


Mga Makabuluhang Resource

Since the 2009, and the inception of Bitcoin, blockchain technology has been the driving force behind a variety of different projects.

Want more in depth information on specific cryptocurrencies? If so, visit our Learn Center to further your education on this ever-growing space.

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