If this internet buzz word still blurry in your mind or you just heard everyone is murmuring around or even not yet clear-cut the differences. Well, you’re in the right place with no need to worry about it simply because we’re all in the same learning journey.
There is always a jumble whenever this term is connoted with Bitcoins or cryptocurrencies for so many of us. Alright, to clear this fog up, let’s try to understand blockchain technology especially the architecture part as simple as possible. Initially, we may say that cryptocurrency is to blockchain what Google is to the internet.
Staying on the same line, let’s have a step back in understanding internet. I can see your eyebrows up!
Well, it’s now an oxygen where life seems to be impossible without internet since its design in 1970s. But let’s think about it this way, it’s like a telephone network or highways network that traverse many cities and countries. Telephones and highways are network like internet then. Similarly, World Wide Web—WWW— is a network of computers that still uses telephone network to function and form this stuff called internet.
However, this network is designed in a way that is decentralized which means that all our computers, smartphones, or any smart-devices are connected to a definite node. It could be a focal point, an Internet Service Provider or ISP, or a server. Also this node turns out to be connected to other nodes allowing all connected devices to communicate via this established connection between a series of those nodes.
Now, you’re wondering what’s the link between this and our blockchain topic? Great! Blockchain technology comes with new way idea in how our data flowing over internet is stored, distributed and generated. That’s why it consists of two words Block & Chain. Meaning, forming a bunch of blocks that are chained together!
The common link here with internet is “the decentralization” concept but to some extent; because still information or data flow (not the network itself) on internet is centralized to a specific node which again redistributes it.
On other side, data flow with blockchain technology is decentralized—thanks to cryptography and data compression technologies. So it’s not redistributed or stored in a specific centralized node but shared over a decentralized network where each connected device is a node itself.
Think about a Word document you wanna share with a friend, located somewhere else in the world, asking him to add more inputs before you print out the final version. In a traditional “internet” way, you need to wait for his copy so then you can access it again and do your last revisions.
Here we conclude that you “both owners” cannot work on the same document at the same time. Now, it’s possible with cloud computing advancements, an example of Google Docs can solve the above issue. However, the hardest part comes in when more people are involved in this process so more data is concerned as well. Subsequently, the distribution task will look like a mix-up or mess in the cloud further to security vulnerabilities!
Blockchain solves this problem by creating a connected set of ledgers and records or blocks. Then a chained database is formed, shared and distributed in a highly encrypted decentralized network of computers.
Having such a bewildering technology, lot of industries are eager to possess it and reap of its benefits. The digital currency snatched rapidly this bounty to secure a paramount position in blockchain-thanks to Satoshi Nakamoto, the unknown person who first authored cryptocurrency “bitcoin” based peer-to-peer and cryptography foundations.
Eventually, Bitcoin was officially born in 2009 creating a mass of furore in the banking industry since its “decentralization” concept is menacing the nucleus idea of the financial system which is founded on the centralization power to one authority only.
Despite that, if we inquire about all major financial transactions occurring in the world, almost 92% are digital money than the real liquidity cushions you may think about! Wherefore, digital currency was created in such a propitious ecosystem with no signs to dissipate against its zealous growth pan the globe.
Be that as it may, lot of influential people are very skeptical about cryptocurrencies and its speculative threat to the global economy. Bill Gates, the famous billionaire in one of his statement said: “Bitcoin is one of the crazier speculative things”. He added: “I would short it if there was an easy way to do it”. His line of reasoning turns around the absence of an intrinsic value in all digital tokens.
Warren Buffet, another business tycoon who raised more concerns about digital currencies by explaining that: “you’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more.”
The famous wolf of Wall Street Jordan Belfort was very anxious by the speculative risk that Bitcoin is exposed to! He said: “there’s no fundamental value, it’s all based on the next guy and the next guy”. Then he added:”Get out if you don’t want to lose all of your money because there’s a very good chance it’s going to crack. And when it really cracks, you’re not going to be able to sell on the way down, there will be no liquidity.”
Having said that, all these influential magnate business people are contented with the technology behind cryptocurrencies that encompasses enormous unrealized potential for endless sectors and verticals.
Beyond everything, a small and medium business company would argue that all these technologies we discussed, in this series of four columns, are either a big data built-in business model of a tech “monster” company or a fearless multinational corporation sitting on lot of liquidity cushions can invest in such sophisticated intelligent systems. I agree with alike statement but small business people still can snatch at least some crumbs of benefits if they know how to exploit their agility capacities against the big players.