Hey everyone 👋🏻,
In this article, let us cover a detailed introduction on Blockchain and the problem that it solves. This is the first part of my Blockchain Series.
What is a Blockchain ⛓ ?
Blockchain is kind of a new way to make transactions. It allows us to make transactions in new ways that are more secure, transparent and even more cheaper than before. It’s main goal is to remove centralization.
Blockchain is kind of a shared database that contains the list of transactions and these transactions are made between the users who become a part of this network. The transaction can be as simple as sending some dollars or can even be a bit complex.
The idea was to create new type of currency that was open to anyone and can establish the trust needed to facilitate the transactions. Bitcoin is a proper use case of a blockchain.
It solves the problem of centralization. But before understanding that, let us understand where is this centralization coming from.
In the current financial system, banks serve as third party mediators that currently handle all the transactions that take place between two users.
These banks have access to everything that we can do with our money and can even choose whether or not they want to share it with us or not.
At other times, banks are not the only third parties that handle it. Whether you use smart cards, e-cash etc. you are giving your information to them too. They also need to communicate with the banks and are an integral part in handling your money. This process can result in delay in the transaction times and fees collected by the companies that are handling your money. So this is something that Blockchain can improve.
Blockchain maintains a digital ledger making it possible to bypass these third parties and thus allows you to send money more quickly and can cut down on the fees associated with making a transaction. So those are the problems that the Blockchain is trying to solve.
So this is it for the very first article on Blockchain. Thanks for reading !