The first blockchain was created by a great inventor, Satoshi Nakamoto, it is a component of the bitcoin trusted protocol. The database is decentralized instead of being centralized; like a typical database that stores how much money you have in your bank account. Nobody can alter the data, even Dark Vader in Star Wars with all his troops combined. The value behind the blockchain is that every transaction is recorded in the ledger since the genesis block. What a strange name, it sounds like a science fiction movie title ;). The genesis block is the first block created when this journey started 8 years ago.
The transactions are stored in the blockchain ledger, this is the concept that every bitcoin public address is recorded with how much bitcoin are on their wallet. The blockchain is 100% protected from a double spending attack. For example, if you possess one bitcoin, you cannot spend it twice. As soon, you spend the bitcoin or send it to someone else, the money is not anymore in your wallet.
Let me explain in simple words how the value it transferred over the blockchain:
- You want to transfer some bitcoins to your best friend in the USA that is called Jerry. Your fictive name is Tom. On this example, Tom wants to transfer 2 bitcoins to Jerry.
- The transaction will be recorded in the next block; you need to know that the blockchain produces one block every 10 minutes.
- Then the block will be broadcasted on every participating node on the network, every node has a copy of the blockchain file. For your information, the blockchain increase in size over time. I know that lately, it has reached almost 100 Mo.
- The participating nodes validate the block and approve the transaction.
- The block with your transaction can then be added to the chain.
- Now your friend in the USA has access to his precious bitcoin into his wallet, the bitcoins has now been moved and recorded into the blockchain ledger.
Don't worry if you have not understood everything, you can see it like a puzzle. You will get the entire piece altogether the more you read about the subject.
What's the revolution behind blockchain? You don't need to have a middleman to validate the transaction. You've completely removed the third party, as you may be aware, you could save a lot of money this way.
The benefits of using the bitcoin blockchain
- You have full control over your bitcoin and no one can restrict access to it like a bank. The bank has the right to freeze your account if you haven't pay your tax for example.
- The fee is very low if you want to send value over the network. That is wonderful! Imagine that someone sends money by the standard channel like the Western Union and pays 7% in the transaction fee. With that, I could almost die from a heart attack.
- You can transfer value at the speed of light! And the confirmation will be simply in few hours, instead of waiting sometimes weeks for a bank transfer.
Furthermore, each block that is produced is linked to the following one. In that case, it is almost impossible to modify the data, the only way would be to have the most powerful computer in the universe that can beat all the node on the network in less than 10 minutes. So you can use the blockchain with peace of mind and be sure that your money will not disappear from your wallet.
Here is a short video of 2 minutes to have more details on the blockchain, some people say an image is like 1000 words: The link on Youtube
Don't hesitate to comment in the section below if you need more information.