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Blockchain: A Misunderstood Digital Revolution. Things You Need To Know About Blockchain
JOHN TASKINSOY
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Abstract
Blockchain and distributed ledger technology (DLT) are used interchangeably. In the aftermath of the 2008 global financial crisis, Bitcoin gave birth to blockchain, or vice versa. A decade has passed since the launch of the first successful cryptocurrency in January 2009 by a mysterious creator under the alias Satoshi Nakamoto. Now along with Bitcoin, 2,915 altcoins are trading with a combined market cap of $222 billion, Bitcoin’s market cap alone is $150 billion (67.6% of the market). Blockchain’s potential is much bigger than Bitcoin; if regulatory uncertainty alleviates, the blockchain’s value can easily increase by hundred-fold to $3 to $4 trillion dollars by 2030. Although financial sector leads blockchain adoption, blockchain’s opportunities in non-financial sectors are immense. In the simplest terms, blockchain is a distributed ledger made up of two parts, blocks containing of data and a chain that holds them together. Blocks are like storage units that store anything of value related to minting coins (i.e. Bitcoin) via a mining process and keeps a chronology of transactions (e-commerce); chain can be metaphorically viewed as a string that holds all the blocks together, created using a consensus algorithm based on proof-of-work (PoW) or proof-of-stake (PoS). Blockchains are often organized into three most common forms; as such, public blockchain (purely peer-to-peer, decentralized and permissionless; any miner (i.e. node) at any time can access the network to add, verify or validate data without restrictions), private blockchain (permissioned, it is controlled by a central authority which grants permission to pre-selected people who can add and verify records), and consortium blockchain (also formed as permissioned, a group of nodes governs all transactions). It is true that blockchain provides anonymity making identities of its users pseudonymous; but contrary to popular belief, blockchain will not possibly solve all our problems and a permissionless blockchain will not guarantee complete privacy since all transactions become visible to all nodes of the network.
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