Blockchain is the technology that enables the existence of cryptocurrency (among other things). Bitcoin is the name of the best-known cryptocurrency, the one for which blockchain technology, as we currently know it, was created. A cryptocurrency is a medium of exchange, such as the US dollar, but it is the case of digital and uses cryptographic techniques and its entire protocol to verify the transfer of funds and control the creation of monetary units.
What is blockchain technology?
A blockchain is a decentralised ledger of all transactions across a peer-to-peer network. Using this technology, participants can confirm transactions without a need for a central clearing authority. Potential applications can include fund transfers, settling trades, voting and many other issues. Blockchain technology has benefited from widespread interest in Bitcoin and other cryptocurrencies. Given today's declining Bitcoin price, the future of the blockchain technology that underlies cryptocurrencies is uncertain.
A typical positive aspects list when discussing blockchain technology includes:
Trust and Reliability
Simply put, it represents a data book (think accounting book that records all "in" and "out" transactions). The ledger is distributed. In other words, many copies of the same ledger exist on computers around the world. It is also protected by strong cryptography which function against malicious actors trying to tamper with the information in the blockchain.
How did this technology appear?
In 1992, W. Scott Stornetta and Stuart Haber proposed the idea of blocks of digital data concatenated using cryptography to prevent tampering with time-stamped documents. By 2008, an anonymous person named Satoshi Nakamoto proposed a new payment system to a group of prominent cryptographers and mathematicians via a list of cyberpunk mailings.
The proposal for Bitcoin: Peer-to-peer electronic payment systems are based on a cryptographically verified distributed online ledger and work via a “proof of work” consensus mechanism, the same technology used to combat spam. The proposal did not mention the term blockchain. The term was later coined with reference to the suggestions of Stornetta and Haber. Today Bitcoin is used in transactions, investments and gambling, more on that on Gamblineers, a comprehensive guide on these matters.
How is new data added to the blockchain?
Each computer (or node) synchronises data through a consensus-based mechanism. Once data is added, it cannot be added or changed on the blockchain unless consensus is reached. There are many types of blockchain databases. The main types are open and closed or private blockchains.
What is in store for this year?
The demise of FXB (Foreign Exchange Bureau) and the subsequent collapse of Bitcoin vividly illustrated how the technological capabilities of blockchain technology could be exploited to achieve the exact opposite of the declared benefits. FXB has undermined Bitcoin's credibility. The decentralised potential of blockchain technology can easily be turned into centralised control by those in power. This happened at a time when technology platforms dominated the internet, despite the internet's decentralised infrastructure. Blockchain enthusiasts often cite the following usage cases: conducting supply chains, financial transactions, identity verification, electronic medical records, elections and real estate transactions;
Blockchain technology is technically promising. Whether these opportunities will materialise for it in 2023 remains to be seen.