What is Blockchain Technology?

Remember the Bitcoin for newbies article that I wrote a couple years ago (lol)?

Well, ever since I moved back to Spain I’ve been getting more and more people engaging me with the classic “what do you do for work?” question. And, of course, as soon as I mention the words blockchain and marketing I get all sorts of funny looks thrown back at me.

I can’t blame them though. Blockchain is a very new industry. Particularly here in Spain. In fact, I’d even say here in Spain people have barely heard of blockchain or crypto yet. This comes funny to me since we’re talking about the biggest tech revolution since the internet.

So, here we go. Let me help you guys get a clear picture of what blockchain technology really is.

Biggest Misconception

First things first – blockchain is not bitcoin. The same way in which Bitcoin is not the same thing as blockchain. Most people get these two terms confused with one another.

Bitcoin transactions happen thanks to blockchain technology, but they are completely different things and concepts.

In essence, blockchain technology is what makes Bitcoin possible. It’s what allows bitcoin transactions to happen. Blockchain is the tool that allows you to send one bitcoin to your friend in Tijuana, Mexico and not have to worry about waiting 3 days for it to reach his bank account or be concerned about high fees that your bank might charge you.

What is it?

You should probably think of Blockchain technology as being a digital receipt. Think of it as going to Walmart and buying yourself a six-pack of beer. After checking out, the cashier hands you a receipt that says that you’ve purchased a six pack of beer and how much you’ve paid for it.

This is exactly what Blockchain technology does. It’s a digital receipt that allows actions to be recorded and viewed online. Forever. And there’s no way in the world in which transactions can be manipulated or altered once they’ve happened.

What kind of actions? Well… anything to be honest. People have created blockchains for all sorts of things. To send money (like bitcoin) to other people, to hold polls and elections, to store and update stocking info… Blockchain is being used and spread across a ton of different industries today. From agriculture, to supply chain, to aviation.

How does it work?

I’m going to talk about Blockchain from a cryptocurrency standpoint okay? Mainly because most of you guys probably are familiarized with two terms – blockchain and bitcoin. But keep in mind that not all blockchains work the same way and that there are different kinds of blockchains.

Blockchain technology is fascinating mainly because it lives off people’s computers. Don’t worry, not every computer in the universe is secretly being used to power blockchains. People to whom we refer as nodes or miners solve (very hard) mathematical problems to validate transactions that happen on a specific blockchain. Why do they volunteer? Well, say that you want to validate transactions happening on the Bitcoin blockchain. If you have a powerful enough computer to validate a transaction faster than anyone else… you get rewarded with Bitcoin! The same applies to any other cryptocurrency blockchain.

Some people make a living out of validating transactions on blockchains. The problem is that as time goes by and cryptocurrencies are mined, validating transactions becomes harder and harder. This means that you’ll need to constantly be upgrading your computer hardware to make your computer more powerful. In most cases, an individual person wont really mine big cryptocurrencies like Bitcoin or Ethereum at this point. There are massive farmhouses filled up with computer equipment which companies dedicate exclusively to mine cryptocurrencies. This is why, today, mining big cryptocurrencies like bitcoin doesn’t make sense since you’ll most likely wont be able to compete with other miners.

Any other uses?

I’ve already talked about how blockchain technology allows for cryptocurrency transactions. But this is just one scenario where blockchain technology is revolutionizing the world.

A personal favorite scenario where I can see blockchain tech improving people’s lives is in voting systems.

Have you ever thought about what happens after we cast our votes in general elections? We don’t really get to see what happens. Only a few people are fully aware of what’s going on. Not to mention that there have been (and will continue to be) election frauds all over the world. Blockchain can solve this issue.

Imagine a country where the main governmental institution creates a blockchain for its citizens to cast their votes. These votes will forever be recorded on the blockchain for anyone to see. Don’t worry, voting can still be anonymous. Here’s an in-depth article explaining how voting and blockchain could happen sooner than later.

I’m going to drop a link here in case you want to check out other industries where blockchain is becoming a game changer.

I hope this helped!

Author: Tony Lewis

Marketing nerd, blockchain enthusiast and part-time planet Earth explorer. I like building (and acquiring) long-lasting assets.