What is the Blockchain?

blockchain explained vs conventional system

Cryptocurrencies are pretty popular at the moment. So, even if you have not had any particular interest in this brave new world of finance, chances are that you have heard a few things about cryptocurencies, otherwise known as virtual currencies.

One word that gets thrown around a lot is blockchain. The entire world has probably heard about it. But ironically, few can fully explain what the term blockchain means, how it works, or even why you should care about it.

What is Blockchain?

And so, what is blockchain? Or even more specifically, what is a blockchain? All these are valid questions; and it is surprising how many people are at a loss to explain what the term means. That’s probably because you don’t need to know what blockchain means to invest and make money using cryptocurrencies.

To begin with, blockchain is a technology that came about with the father of all cryptocurrencies – Bitcoin. To say the least, blockchain technology is the backbone of any virtual currency in existence today. Otherwise, blockchain is a digital record of a financial transaction and other transactions leading up to it.

What Makes Blockchain Technology Special?

What gives this technology a reputation as a groundbreaking financial discovery is the fact that it is incorruptible and decentralized. This makes up for many flaws that exist in the traditional financial system.

Thanks to blockchain technology, a transaction’s details are duplicated several times, and linked to all the preceding transactions. This makes it impossible for any single party to modify a transaction’s information to their benefit.

For instance, a hacker would have to hack a particular block, and every other former block to be successful. That is practically impossible, which is why the technology is so astoundingly secure. Furthermore, this financial information is publicly available and decentralized – it is spread out over countless computers.

That is what makes blockchain technology so ironclad. No single entity, be it be a bank, a government, or even a hacker, can tamper with the details of blockchain transactions.

So, to put it simply, blockchain is a safer and more reliable way of handling online-based financial transactions. And although the mainstream banking industry is beginning to appreciate the benefits blockchain technology has to offer, it is primarily associated with virtual currencies. That is why the terms cryptocurrency and blockchain technology still go hand in hand today.

How Does Blockchain Work?

Here is how blockchain works – to avoid having to rely on the integrity of another party in a financial deal, or involving an expensive third party, blockchain takes on the role of a cheap and independent go-between.

Based on a script detailing the terms of the contract you are making with someone else, the blockchain will know how to settle the transaction when the conditions of the contract are met. So, if someone acknowledges the receipt of goods, the technology will know to make the escrowed cash payment to the seller.

The brilliance of this technology is that it is smart enough to know that the contract conditions have been met without the need for additional input from any of the parties. For this reason, the system is completely impartial. To top it off, the technology works fast and at a much lower cost.

How Blockchain Technology Can Make You Money

A lot of people are investing in cryptocurrencies and making themselves fortunes. Many of them cannot even offer a coherent explanation of what blockchain is, but they still make money through their investments.

As mentioned earlier, blockchain is the backbone to any virtual currency. So, once you understand what blockchain is, you are pretty much conversant on how any cryptocurrency is configured to function. And this knowledge should give you an upper hand as you dip your toe into the world of cryptocurrency investments.

Some people speculate on the prices of virtual currencies, trading them in exchanges for a profit. This is sort of like a regular forex exchange transaction. The upside is that these new-age currencies tend to experience deeper price fluctuations, which means you will get better opportunities for profits if you take the right positions in these transactions.

You can also make money, indirectly, by accepting cryptocurrency payments for your goods and services. Being safer, you will have a better chance of getting paid for your services. Additionally, since blockchain technology comes with reduced transaction costs, you will save quite a bit of money over time.

It is also possible to make money through blockchain technology by setting up computer rigs to help mine virtual currencies. Depending on the size of your crypto mining operation, you can rake in hundreds or even thousands of dollars each month through cryptocurrency mining. One of the biggest companies that provide mining services is BitClub, they offer mining pools where you can earn bitcoin by getting together with other people. It’s worth checking out if you want to start immediately.

There are countless other ways to make money through cryptocurrencies. For instance, you can register with a bitcoin faucet site and get paid to view ads. You can also earn virtual currency for small online tasks, and so forth. You just need to do a little research to discover where your most promising path to blockchain-based fortunes lies.