The term ‘blockchain’ has received a lot of attention recently. It is heard almost daily in media and is a word that is often thrown around loosely by many, associated with cryptocurrency speculation, and branded with fanciful terms like the new ‘internet 3.0’. This vague, mysterious description often adds an unnecessary layer of skepticism around what really is an impressive development in databases and valuable technology at its core.
What is a blockchain?
The first blockchain was created in 2009 in response to the subprime loan crisis, a time when the integrity of the banking system was shattered and distrusted. The fundamental premise behind the blockchain was to move towards decentralization, which simply means to take the power out of the hands of a select few. At that time, the main focus was on the banks and the financial system, and people began using the blockchain to cut out banks as intermediaries and transact with one another directly.
The blockchain is a method of securing transactions quickly, and without the need for human intervention. It is owned by nobody and is therefore not subject to the possibility of mistreatment by an intermediary that may make mistakes, discriminate, waste time, or change their terms at their discretion. Participants in the blockchain network make this possible by securing it, using their computing power to encrypt and confirm transactions. To incentive users to join the network, they are offered compensation for contributing their computing power. This compensation is paid in the form of cryptocurrencies.