Using Bitcoin does not require any third party or financial institution that will record and validate all of the transactions made. So where do our Bitcoin transactions being recorded and how is it being verified? All of the Bitcoin transactions are recorded in a public ledger called the Blockchain. The blockchain is a continuously growing block of records which contain a set of bitcoin transaction records.
Where are our Bitcoin transactions recorded?
The blocks can be thought of as pages of the whole record book which is the Blockchain. Whenever blocks are completed (wherein transactions are verified through the process called mining), they are added in the Blockchain in a linear and chronological order. Each added blocks on the blockchain contain a hash of the previous block, so altering them, in any way, would not be possible. Also, as it is called a public ledger, the blockchain can be viewed by anybody. Therefore, the Blockchain exhibits a transparent and trustless way of keeping transaction records.
Breaking down the blockchain, it contains blocks and a block contains records. Then, a record contains a Bitcoin transaction that includes the senders’ Bitcoin address, the amount of bitcoin and the bitcoin address of the recipient. No other information such as who sent the amount and who received the amount, unless if you disclosed that you own that certain Bitcoin address. Anyone can also be able to check the amount a Bitcoin address holds.
How did the Blockchain technology emerge?
Leonhard Weese wrote on 99bitcoins about how this technology emerged and how the markets, the government and other technologies take it for other more useful developments. He mentioned about Bitcoin as having a 99.9% uptime without continuous network forks and fund losses due to protocol bugs, it has been observed by financial and power institutions that this success in using the Blockchain technology could be replicated to heighten the existing financial system. Weese also tells that the Blockchain earns Banks more profits and eases governments in collecting taxes. With this phenomenon, “Bitcoin 2.0” emerged as a better banking infrastructure wherein Ripple Labs took advantage in 2012 and made a success with it. Bitcoin 2.0 was then called as Block Chain 2.0 in 2015 and later until, ita was just called simply as the Blockchain technology.
Many have made theories that blockchains could replace the old technology being used for our current financial system. However, Weese said, however, that these technologies are incapable, in any way, of altering the markets and political power structures. He shared his thoughts about that there was not a time that financial institutions, the government or the media gave so much attention and efforts to the database and wire transfers technology. Weese stressed out that the blockchain technologies are just a sort of cargo cults and just a result of observing the success of Bitcoin which uses the database technology.
What are the benefits of the blockchain technology?
George Howard, a contributor at Forbes wrote an article about Blockchain being a way to rebuild the internet and that it benefits inventors. The internet is one of the most promising technology which until now none has ever surpassed when it comes to adoption and development. However, he said that verification is something that the internet have not yet fully accomplished. In conjunction, he said that uncovering the origin of any type of intellectual property in the internet could not directly provide attribution, credit or compensate the creator in a fast and easymanner. So the main concern of his opinion is that the newly imagined internet will use the Blockchain technology as a solution to these issues.
Howard enumerated some characteristics of the Blockchain technology that would benefit inventors and users of blockchain applications:
- As a public ledger, the Blockchain technology records and validates transactions from around the world. It also provides time stamp and ownership which makes it reliable and secure.
- Every transaction on record are authorized or verified by a process called mining and mining is done by numerous computers called miners. This process prevents records from being hacked.
- Blockchain is decentralized, which means no one controls or owns it and therefore it is immutable.
- There is no need of any central authority or third-party intervention on the transaction process. It only allows a peer-to-peer transaction.
What is the role of Blockchain in the Economy?
According to the co-founder of Bitbuy.ca and entrepreneur Adam Goldman in his post published at Coindesk that the a free-market economy definitely needs a trustless system such as blockchain. He said that as our government-controlled economies continue to advance and develop, we can not deny that they are not free from human imperfections and so we risk our assets with them based on relationships, experience and reputation. And so, he sees blockchain as a solution to get rid of “trust” as a necessary part in a free-market economy. Therefore, the world needs a “trustless” system for our economy.
He also added that stock markets and major banks nowadays is heading up on developing blockchain technologies. Aside from the successful applications such as Bitcoin and Ethereum, many are now having a group action towards alternative applications for the blockchain technology. With its low-budget, quick and high securityaspects, opportunities is endless.
How does the US government see the Blockchain technology? – A recent update
According to Coindesk, the US Congress passed a bill in support to Blockchain and as well as for crypto currencies. In July this year, Representatives Adam Kinzinger from Illinois and Tony Cardenas from California wrote a resolution that calls on the US government to craft a national technology innovation policy in support to crypto currencies and the Blockchain. The Bill passed on September 12, 2016, by a voice vote and even though it is a non-binding resolution, it is still one of the most important developments in the cryptocurrency world.
Moreover, one of the voices that voted the bill to pass was from Texas Representative Michael Burgess. He said during the hearing that blockchain innovations are on the cutting edge today. What is more to expect is if bitcoin and the blockchain will get more substantial support on the next session of the Congress.
The Blockchain technology is definitely a kind that should not be taken for granted. It provides endless opportunities in creating more significant applications and solutions that will improve financial economic systems.