Are you new to the blockchain world and have no idea how to begin? News about the drastic upsurge and downfall of cryptocurrencies ignites curiosity among everyone. However, the information available on the internet is mostly confusing. Most of the articles use complex language that confuse readers and they bounce from one website to another frequently. If you are also one of them and want to understand blockchain stuff in simple language, read the information below carefully.
Blockchain And Cryptocurrency Are Two Different Things
The first thing you need to understand is the significant difference between blockchain and cryptocurrency. Many people get confused while differentiating between cryptocurrency and blockchain. Actually, blockchain is a digital ledger meant for managing cryptocurrency. This technology was invented with a purpose to record and distribute the information without letting anyone edit.
Many people still recognize cryptocurrency as Bitcoin because it was the first crypto money that came into existence in 2009. Right now, more than 4000 different cryptocurrencies are existing and their number is increasing with time. The significance of blockchain is much broader than managing cryptocurrencies only. This digital ledger is capable of managing and safeguarding data of different fields. Let’s elaborate on its working and efficiencies in detail.
How Does Blockchain Work?
Blockchain is the most disruptive technology since the emergence of the internet. It’s not just a single technology but an ecosystem of technologies that’s growing at a rapid speed. The world is going crazy about it because of its immense potential from altering the way industries work to giving complete power to individuals.
So, how does blockchain really work?
As we have already mentioned above, it is a digital ledger capable of maintaining data. Once you enter some data in this ledger, it gets secured by the 264 bit encryption system. Blockchain is a decentralized system in which information throughout the world is feeded on a regular basis.
The size of a block in the blockchain can go up to 8 MB and it is enough to store around 500 transactions. Once a block is filled, it gets linked in the chain of a previously built block. Data entered in these blocks is irreversible. If someone tries to manipulate the information, it becomes visible to every node connected with that particular chain.
All credit goes to a decentralized system that is transparent and highly secure. Apart from managing cryptocurrency, the other significance of blockchain for beginners needs to be clarified.
Let me explain how this technology is gradually changing the virtual world of the internet:
Uses of blockchain apart from cryptocurrency management
1. Secure Electronic Voting
Voting with the help of blockchain is not a concept but actually occurring on the ground level. Sierra Leone is the first country that conducted a voting system based on blockchain technology. The decentralized and highly secure nature of blockchain are the main reasons why states have started relying on them more than ballot paper and EVM.
2. Cloud Storage
Right now, most of us are using a centralized cloud storage system. The owners of cloud storage service providers possess complete control over your online assets. A cloud storage powered by blockchain is the safest cloud space you can have.
3. Smart Contracts Formation
While studying cryptocurrency guides for beginners, you should also be aware of smart contracts. Instead of paper contracts, programmable digitized contracts are created with the help of blockchain technology. From a mortgage case to a divorce settlement, these contracts serve the purpose of legal evidence.
Apart from that, blockchain is also drawing the attention of the defense, money laundering tracking system and NFT marketplaces etc.