Introduction to Blockchain - the technology behind Bitcoin

Published 2 years ago

We live in an era where the change is happening so fast - people can't keep up with all the trends and innovation. We see disruption in every aspect of our lives. A lot of old jobs are replaced by technology but at the same time technology is creating new jobs and us people need to adapt to the times we are living in. We witness how manual work is replaced by robots, autonomous cars, artificial intelligence starts to replace also human labor which involves some brain activity. All this being said we at ExtremeSetup also need to keep up with the technology and move it forward, because we believe that technology should be a tool in hands of us humans, a tool which will make our lives easier and happy. In the last few months, we were investigating a new technology - Blockchain. That is why in the last few months we were silent on our platform. It is a very hot topic right now and we believe that blockchain technology is going to be huge in the next decades. So let's start our journey through blockchain technology together and explore the opportunities which it can provide to us. Since we are developers we are going to tackle also the technical terms here, but I think that sooner or later everybody will embrace the technology and you have to know what is it all about and how to use it. But we will start with basics and will define all the new terms in an easy and understandable manner. In the next posts, we are going to go deeper into this space, but for now, let's start with basics.

Blockchain is a distributed database. This is not the final definition but it's the shortest. For non-technical people, a database is a piece of software for storing information. Distributed means that the same copy of the database is owned by all the individuals in the system. In simple terms, this is what blockchain is all about, but of course, there is more. But before we dig more into this let's stop here and ask some questions like Why would we need our own copy of the database? What can we do with this?

I will try to address those question as easy as possible. Of course having our own copy of the database will add more technical complexity but if decentralization happens this should solve a few problems like transparency. All the information is known by all the people involved in the system. If somebody will try to change something in their own database all the rest of the participants will spot this and will not accept it since it is not synchronized with all the rest. Decentralization also fixes the problem of security and backups. Now there is not only one single point of failure. This means that even if you bring down a few individuals or they fail on their own the system itself will not be affected and information will not be lost. All these problems now can be fixed by implementing blockchain.

Moving to the next question - What can we do with it. The first field where it was implemented and already adopted was "monetary system". People created currency based on the blockchain technology - also known as the cryptocurrency. By now you should already know that this project is called Bitcoin. We will have a separate post on Bitcoin and cryptocurrencies, for now just keep in mind that there are a lot of cryptocurrencies out there and all of them are based on blockchain technologies but can be built differently from one another. Currencies are the field that was first disrupted by this technology at least by the time of this writing but we expect in future to have this technology implemented in other sectors like business, healthcare, insurance, politics and so on.

Now since it is an introduction to blockchain we are going to stop here. New terms to remember from this post are blockcahin, distributed database, decentralization, cryptocurrency, bitcoin. Let us know in comments whether it was useful as well as what topics we should tackle in future.