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Blockchain Technology - What is it? Part 1


"The practical consequence is for the first time, a way for one internet user to transfer a unique piece of digital property to another internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate."

- Marc Andreessen [American entrepreneur and owner of influential Silicon Valley VC firm Andreessen Horowitz - successful investments include Instagram...]

You might initially think that Blockchain looks like Wikipedia - looking from above.

Many people can write entries into a record of information, and a community of users can control how this record is amended and updated - this is Blockchain. Wikipedia entries are not the product of a single publisher. No one person controls the information.

From a ground level perspective, Blockchains' differences become much clearer; while both run on distributed networks [the internet] Wikipedia is built into the World Wide Web using a client-server network model.

A user [client] with permissions associated with its account, is able to change Wikipedia entries stored on a centralised server. The user will get the updated version of the 'master copy' of the entry. Control of the database remains with Wikipedia administrators allowing for access and permissions to be maintained by a central authority. Wikipedia's digital backbone is similar to highly protected and centralised databases that governments or banks or insurance companies keep today. Control of centralised databases rests with their owners, including the management of updates, access and protection against cyber threats.

The distributed database controlled by Blockchain technology has a fundamentally different digital backbone.

This is the most distinct and important feature of blockchain technology.

Wikipedia's 'master copy' is edited on a server and all users see the new version. In the case of a blockchain, every node in the network is reaching the same conclusion, each updating the record independently, with the most popular record becoming the de-facto [what happens in practice] official record in lieu of their being a master copy.

Transactions are broadcast, and every node is creating their own updated version of events

It is this difference which makes blockchain technology so useful - it represents an innovation in information registration and distribution, eliminating the need for a 'trusted' party to facilitate digital relationships.

Blockchain technology is, surprisingly not a new technology!

More tomorrow.

#blockchain


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