Blockchain is a digital transaction record based on its structure, in which individual records, called blocks, are linked together in a list, called chains. Blockchains are used to record transactions made with cryptocurrency , such as Bitcoin , and have many other applications. Blockchain is an intelligent discovery of the idea of a person or group of people known by a pseudonym, Satoshi Nakamoto . And since then, it's evolved into something bigger, and the main question everyone asks is: What is Blockchain?
In our B2B 2019 Marketing Instructions article we mentioned Blockchain as a marketing strategy in 2019. This time we will discuss specifically about the Blockchain and provide guidance that makes it easy for you to understand Blockchain. In this guide, we will explain to you about what blockchain technology is, and what its properties make it very unique.
So please prepare your coffee to enjoy the reading this time, here is a Blockchain guide for beginners.
Definition of Blockchain
Blockchain is, in the simplest terms, a series of data records that are managed by a group of computers that are not owned by a single entity. Each of these data blocks (ie blocks) is secured and bound to one another using cryptographic principles (eg Chains). So this term is referred to as the Blockchain
So, what's so special about this technology and why is there an opinion saying that the blockchain has the potential to disrupt the industry?
The blockchain network has no central authority - this is the main definition of a democratization system. Because these are ledger notes that are shared and do not change, the information in them is open to anyone and everyone to see. Therefore, anything built on the blockchain is basically transparent and everyone involved is responsible for their actions.
Explanation of the Blockchain
Blockchain has no transaction fees. (Infrastructure costs do !, but there are no transaction fees.) Blockchain is a simple but clever way to convey information from A to B in a completely automated and secure way. One party in a transaction starts the process by making a block. This block is verified by thousands, maybe millions of computers distributed on the internet. Verified blocks are added to the chain, which is distributed in a special network, then creates not only unique records, but unique records with unique history.
For example train service. We buy tickets through the application or the web. Credit card companies make deductions to process transactions. Now with the blockchain, train operators can not only save costs when processing credit cards, but can also move the entire ticket sales process into the blockchain. The two parties to the transaction are the railroad and passenger companies. The ticket is a block, which will be added to the ticket blockchain. Just as monetary transactions on blockchain are unique records, some can be verified, and cannot be verified (such as Bitcoin), so can your ticket. By coincidence, the ticket blockchain is also a record of all transactions for, say, certain train routes, or even the entire train network,
But the key here is this: FREE! Not only can the blockchain transfer and save money, but it can also replace all processes and business models that depend on processes that require small fees for transactions. Or other transactions between two parties.
Already know what Blockchain is? Here is an example
In order to better understand what Blockchain is, here we give other examples. Let's say an agency company professional service provider for companies or individuals who need professional services, we call the ABC company. They charge Rp. 5,000 for each transaction for those who buy and sell services. Now by using blockchain technology, this transaction is free! Third-party companies like this are likely to sink no longer exist. Likewise with auction houses and other business entities that are based on market-making principles.
Even newcomers like Uber, GoJek, Grab and AirBnB and the like are threatened by blockchain technology. All you need to do is encode transactional information for a car trip or overnight stay, and once again you have a very safe way, which can disrupt the startup business model that is just starting and challenge the traditional economy. Blockhain can cut intermediary costs for processing a transaction.
Until here have started to understand what is a blockchain? read again ...
Because blockchain transactions are free, you can charge very small amounts, say 1/100 cents for video viewing or reading articles. Then the question will arise in our minds, why do I have to pay the subscription fees for other magazine compass magazines if I can pay per article on Facebook or my favorite chat application so I can read it anywhere at any time and according to the article I like.
Once again, keep in mind that blockchain transactions do not have transaction fees. You can charge any amount without worrying about third parties cutting your profits.
Blockchain can make selling music records even more profitable for artists by stopping music companies and distributors like Apple or Spotify. The music you buy can even be encoded on the blockchain itself, making it a cloud archive for every song you buy. Because the amount charged is very small, subscription and streaming services will be very irrelevant meaning that the price will be very CHEAP!
How Blockchain Can Revolutionize Traditional Business Processes
Let's look further, How Blockchain can cause a Business Process Revolution that exists today. We take the example of E-books, electronic books can be equipped with a blockchain code. What is happening now is that Amazon is providing space for everyone to sell their E-books and then the credit card company makes money from sales transactions. But with Blockchain electronic or even non-electronic books will circulate in an encoded form and every successful blockchain transaction will transfer money to the author / owner of the book and unlock the book to the buyer. Yes! Transfer ALL money to the author, not just a modest royalty. You can do this on a book review website like Goodreads, or on your own website.
We can see examples of the influence of Blockchain that is even more powerful in the financial world, through clearer applications and more real revolutionary changes. Blockchains will change the workings of the stock market, loans and insurance contracts. They will eliminate bank accounts and practically all services offered by banks. Almost every financial institution will go bankrupt or be forced to change fundamentally, once the benefits of a secure ledger (blockchain transaction logbook) without transaction costs are widely understood and implemented. If all of that is successfully implemented, the financial system is built to facilitate facilitating transactions at a cost cut that is virtually non-existent.
At this point you should have started to get an idea of what Blockchain is and how its examples and effects ... reread below for further guidance on blockchain!
How Does Blockchain Work
Already know what a blockchain is, its definition and can already imagine the function and power of a blockchain. Now the question arises, how does blockchain work? how can it have that much influence? okay we discuss slowly while enjoying your coffee ...
The following are the Three Pillars of Blockchain Technology
The three main properties of Blockchain Technology that have helped him gain widespread recognition are as follows:
- Decentralization
- Transparency
- Eternal (cannot be changed)
Decentralization
Before Bitcoin and BitTorrent arrived, we were more accustomed to centralized services. The idea is very simple. You have a centralized entity that stores all data and you must interact only with that entity to get whatever information you need.
Another example of a centralized system is a bank. They save all your money, and the only way you can pay someone is through a bank.
The traditional client-server model is a perfect example of this:
When you search for something on Google, you send a request to the server which then replies by sending data in the form of relevant information. That is simply client-server.
The existing centralized system has treated us very well for years, however, they have some weaknesses.
First and most crucial is that because it is centralized, all data is stored in one place. This makes it an easy target for potential hackers. If there is a centralized system repair or update then we have to go through a software upgrade, it will stop the whole system while the process is running.
What if the centralized entity is closed for any reason? That way, no one can access the information they have. The worst case scenario, what if this entity is damaged and malicious?
In a decentralized system, information is not stored by a single entity. In fact, everyone on the network has information.
In a decentralized network, if you want to interact with your friends then you can do it directly without going through a third party. That's the main ideology behind Bitcoin. You and only you alone are responsible for your money. You can send your money to anyone you want without having to go through a bank.
Who Will Use the Blockchain?
At present, many financial institutions are the strongest potential to try to implement the use of blockchain technology. International money transfers, for example. The World Bank estimates that more than $ 430 billion in remittances were sent in 2015. And there is currently a high demand for blockchain developers.
Blockchain has the potential to bypass intermediaries for this type of transaction. Personal computing became accessible to the general public with the invention of the Graphical User Interface (GUI), which took the form of "desktop". Likewise, the most common GUI designed for blockchain is the so-called "wallet" application, which people use to buy things with Bitcoin, and store them together with other cryptocurrency.
Online transactions are closely related to the identity verification process. It's easy to imagine that the wallet application will change in the coming years to include other types of identity management.
Blockchain gives internet users the ability to create value and authenticate digital information.
Even though it sounds revolutionary, Blockchain is truly a mechanism to bring everyone to the highest level of accountability. No more missed transactions, human or machine errors, or even exchanges that were not carried out with the agreement of the parties involved. Above all else, the most important area where Blockchain helps is to guarantee the validity of a transaction by noting not only the main register but a distributed register system that is connected, all of which are connected through a secure validation mechanism.
Ticket is not a block, it's a transaction. Block can have 1 or more transactions. Block having no transactions serve no purpose and usually is discouraged in most block chains due to waste of storage space.
Block chains can change up to maximum depth, which is usually same as the chain length when synchronizing nodes, the hash of the first block is compared when syncing, so it can't change.
When people think block chain can't change, they think it as single block can't change, as it would invalidate the block hash, but block can be replaced with another block in primary chain. The previous block in the primary chain is moved to alternate chain that starts at the same height and other blocks can be chained to it to create longer alternate chain.
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