What is the Blockchain?

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Wondering What is Blockchain? Investing In Cryptocurrencies Means You Need to Know

What is Blockchain?

 

Any investor in stocks, bonds or commodities or even the cryptocurrencies should have a strong understanding of what they are actually investing in.

 

If it you want to invest in General Electric (GE) stock you should know a little about its business and its profit or loss forecasts. You’ll be able to develop a feel for the long term prospects for the stock.

 

However, with online brokerages offering low commissions it is easy to just to click and own the stock based on what you think the price chart is saying.

 

What is the investor actually doing here? Are they following a pre-thought out plan based on their research? Or are they just looking for some action? Often it is the latter. I write with personal experience of that.

 

In my opinion, gaining an edge and part of your strategy as an investor should be to understand the fundamentals of the investment you’re interested in.

 

The cryptocurrencies are no different. At the heart of the digital currencies is the blockchain technology which powers them. Blockchain technology is not just a hot topic within the Financial Technology sector but also across many other industries. It has user far beyond finance.

 

Public Record

The blockchain is a register which shows all the transactions that have taken place. It could be seen as an accounting ledger. This ledger is open for the public to view and scrutinize. 

 

Every single transaction that has taken place in bitcoin is a public record. Consequently, the blockchain is a constantly growing chain. Each new transaction adds a new block to the end of the chain. 

 

Linear Chain

 

By adding a new block to the end of the chain, the blockchain forms becomes a linear, list in chronological order. This is public record for anyone to check its provenance.

 

Using cryptography a linear structure to the blockchain is created. This structure is robust enough to withstand attempts at fraud. Consequently, the blockchain can be seen as a secure, public record of all the transactions that have taken place on the network. 

 

Uses Beyond Finance

 

In a post credit-crisis era where confidence in traditional banking has been destroyed. Fans of blockchain technology see many advantages beyond just the decentralization of banking. They see blockchain as being able to offer cost reduction and increased regulatory compliance and while also reducing risk.

 

Property such as houses or car or intellectual property such as patents or company shares can have the blockchain technology embedded within it. The Ethereum blockchain is specifically for this. What this means is that the registration of the ownership of this property (tangible or not) can be kept on a register (the blockchain).

 

Within this ledger are the contractual details of other parties who have an interest / ownership in the property. Smart keys can be used by any permitted party should they require access. The register stores every exchange of these smart keys as and when a new contract is created and verified.

 

Want To Learn More For Free? 

 

If you would like to learn more about cryptocurrencies in particular, Bitcoin you should sign up from the Smart Bitcoin Buyer’s free course. I spent some time putting the course together and have recently updated it to include free PDFs. It is aimed at the Bitcoin beginner. The course is delivered by email over several parts so your knowledge can develop slowly. Sign up here to join the course.

 

You can read also more: 5 Things You Should Know About Bitcoin

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