Whenever someone brings up the topic of how humanity has progressed, we always seem to compare our present with the times of wars, rulers, and kingdoms. Now, to measure the progress we don’t necessarily have to span over decades instead let’s look into the recent history because if you think about it we have come a long way in just 20 years. We grew up without the internet and smartphones and now it’s an integral part of our lives. Also, we predict extreme technological advancements in the coming years and although the world doesn’t look ultra-modern I can say the future is now. For example, many of us still think that Artificial Intelligence is in the making but in fact, it already exists and is used widely. Many such technologies which we think are yet to be made have already been made but it’s just not commercial yet.

This article is about one such technology that is futuristic but already in use. It is a topic of current interest and a lot of people are debating over it. It’s called blockchain technology. It is one of the most beautiful things that I ever had the pleasure of reading although I still don’t fully understand it because the technical aspect of it is tricky and needs to be properly studied. Now the reason why I’m writing this is that you don’t need a Ph.D. to appreciate its brilliance. By the end of this article, I hope you realize the times that we are in and think about the times you would want to be in. So let’s begin at its birth…

In 2008, a person or a group of people called ‘Satoshi Nakamoto‘ introduced blockchain to the world by publishing a paper that discussed the idea of a digital currency named bitcoin that is both secure and trustworthy. The identity of Nakamoto still remains a mystery. Before we dive into the crux of blockchain it is important to understand the normal financial system and the problems with it.

Every country has its own currency, its own government, and the banks that handle the currency. These currencies have value because the government says it has value. All transactions are facilitated by banks and people have to rely upon them. Without the trust in the government and the banks, you cannot use money. Nakamoto came up with an idea of a currency that eliminates authorities like the banks and the government thereby solving the problem of placing your trust in these central figures. Another problem with normal currency is that we can’t know how much of it is in circulation. Bitcoin on the other hand has only 21 million coins that can be in circulation. Now the obvious question is who gives Nakamoto’s currency its value? and who will oversee all the important stuff relating to money like the bank? The answer to both of these questions is you yourself. No, you don’t have to study banking. Everything will be done by your systems/computers. You will be using bitcoin just like any other currency.

Anything can be of value if a majority of people believe it has value. The value of 1 Bitcoin went from $0 ( in 2009 ) to $54996.20 ( as of today ). This revolutionized money because now people have a neutral currency that is not controlled by any government of any country. The part of banking it yourself is where it gets technical and I will briefly try to explain it.

Bitcoin incorporates blockchain technology. Blockchain is like a database or a ledger that stores data in blocks that are chained together. In Bitcoin’s case, 1 block is a batch of transactions and these blocks are chained together using cryptography. This type of structured ledger makes it tamper-proof and secure. The power of cryptography makes sure that every transaction on this ledger is permanent and cannot be changed or edited. It also ensures that no transaction is missed and every single transaction ( since 2009 for bitcoin ) is recorded. Now, typically ledgers are handled by banks but as I said there is no centralized authority in the blockchain. Nakamoto’s genius is that he conceptualized a system of a distributed ledger via the peer-to-peer protocol. To eliminate the banks, Nakamoto suggested making the ledger public so that everyone has their own copy of the ledger. Confused? Let’s address the questions…

How does it distribute the ledger?

Remember Torrents? It works on the peer-to-peer protocol. What it means is that two or more computers can directly share files with each other without the need for a middle server. It creates a network between all the users so they can directly download files from each other’s computer, unlike the other file-sharing protocols which follow a client-server model where a single server serves many users at once. There is a misconception that torrenting is illegal. It is essentially a file-sharing protocol and is legal as long as the content is legal. Blockchain uses this protocol to distribute its ledger making it totally decentralized.

If everyone has access to the information in the ledger then what makes it secure?

All the transactions are encrypted. The ledger is public but no personal information is visible. To understand it better, visit this site to see all the transactions of bitcoin happening in real-time. Also, it is really hard to commit fraud or hack this system. The simplest explanation is that the hacker cannot alter any block of transaction without having to make changes to all its previous blocks. All blocks are chained together in sequential order. Moreover, the ledger is distributed which makes it difficult for the hackers because they cannot update all the copies. In fact, helping to improve the blockchain is more rewarding than trying to hack it. This brings us to the question of…

Who updates the ledger with valid transactions?

Anyone on the blockchain network can participate in adding blocks of validated transactions providing they have the necessary equipment. It takes a lot of computational power and can only be done using high-end GPU hardware. This process is called mining and the people who do this are called miners. It literally means extracting new blocks by verifying transactions and adding them to the chain. Verification is done by solving complex mathematical problems ( It is basically guesswork done by your computer. Trust me when I say you don’t need a Ph.D. to do it ). Whoever comes up with the solution first gets to add the block and broadcast it so that all copies of the ledger get updated. Mining is totally optional and you don’t have to do it to use the currency. The reason why miners do this is that

1. They are rewarded with bitcoin whenever they add a new block to the chain.
2. Mining is the only way new bitcoins can come into existence. In other words, the rewards are basically newly minted coins that come into circulation. Every time a block is added, the amount of bitcoins available keeps increasing.

Every 10 minutes a new block is added to the chain which means more bitcoins come into circulation. After calculating all parameters it is said that the last bitcoin ( 21 million in total ) will be mined in the year 2140.

All this came from the brain/brains of Satoshi Nakamoto who we don’t even know. I need a movie for this already!
I hope you all understood the basics of Blockchain and how it works. Although Nakamoto introduced it for the currency bitcoin, the world was quick to realize that this technology can be used for so much more. These are some of its use-cases:

Cryptocurrency

Bitcoin was the first cryptocurrency and soon many such currencies came into existence. It is important to note that there were digital currencies before bitcoin but the main difference is that bitcoin solved the problem of double-spending ( spending the same coin twice ) and decentralization by introducing the distributed ledger concept over P2P protocol.

NFTs

Ever collected pokemon cards or tazos? It is the same thing but digital. NFT stands for non-fungible tokens which means tokens that cannot be interchanged. All types of digital files can be made an NFT. Example: Twitter CEO Jack Dorsey sold his first tweet as an NFT for over Rs 20 crore.

Decentraland

GTA( Grand Theft Auto ) but in the blockchain. You can build your avatar in a 3D world. The in-game currency is called ‘MANA’ through which you can buy in-game NFTs and even land parcels. Imagine owning a virtual land that you can rent out or build a club on or do anything you like with it. It is a decentralized world owned by its users.

Steem

Steem is another blockchain that has social media platforms on it. It is a platform that promises great revenue-making opportunities to its content creators.

BTT

Ever used the BitTorrent? It the most widely known company having the P2P protocol. It is now owned by TRON that is like Ethereum ( TRON and Ethereum are platforms where developers can create Dapps, that is decentralized apps that run on the blockchain ). They have come up with BTT ( BitTorrent Tokens ) to monetize its ecosystem.

Blockchain can also be used in elections for voting, in the food industry, and also in real estate. There is a lot more to it which makes it even more fascinating. Recently, bitcoin investment has seen behavior that matches a stock market investment. People are trying to make a profit out of it by trading it like stocks. This isn’t a stock market because when you invest your money in a cryptocurrency, you own the currency. You can spend that currency in the future where almost everything can be bought using these neutral currencies. Trading bitcoin like a stock will never let it reach its full potential. For it to become a dominant currency, people have to invest and hold. The whole point of bitcoin was to create a currency made by the people and for the people. If a lot of people will hold it long enough its value will go high and stabilize and then everyone will start accepting payments via bitcoin. That’s the goal.

I hope you had fun and also gained some insights after reading this. Maybe now you understand the times we are in and also the times you want to be in…