You’ve probably heard about those astronomical returns gained by some Bitcoin or Dogecoin investors and thought to yourself – how do I get a piece of the action? When you start to dive into the world of cryptocurrencies, the first concept you’ll most likely stumble upon is blockchain. It is the basis of what these cryptocurrencies are built on. Thus, gaining a mastery of blockchain technology is key to being able to participate in the category both as an investor and as a consumer.
At its core, blockchain technology refers to a database distribution between multiple computer network nodes. A common way blockchain is explained is to think of a digital ledger that holds transaction history. Data that is collected by blockchains are immutable, meaning that existing transactions cannot be changed. Instead, you can only add new transactions, which then updates the value of whatever asset is being bought or sold within the network.
Asset Classes That Blockchain Can Handle
Blockchain technology can be applied to virtually any asset of value. It can be a tangible asset, such as a property, currency, or cash, or an intangible asset, like a product patent, trademark, copyright, etcetera. The use of blockchain in trading these assets can lead to lower risk and overall costs. Since data contained within the blockchain network is immutable and distributed amongst multiple servers across the globe, it’s difficult to make any unauthorized and unverified changes.
An important concept that makes blockchain efficient and promising for real world applications is smart contracts. To speed up how quickly transactions can be verified and completed, smart contracts were introduced. This pertain to a set of protocols that is stored within the network and is automated to execute when the right conditions are triggered. A smart contract can be created with variable conditions that suit corporate bond transfers, travel insurance coverage terms, etcetera.
Benefits of Blockchain
Trust is one of the key benefits that blockchain networks endorse to consumers. By participating in a blockchain-backed transaction, you get that peace of mind that you are getting precise and timely information. Furthermore, since consensus on data integrity is required from all network nodes before a transaction is allowed, transactions are made more secure.
Blockchain is continuing to evolve and gain greater social acceptance. Learning it now can give you a better user advantage.