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With the advent of cryptocurrency and Bitcoin came the real gem, aside from crypto being used as an accepted store of value. Blockchain technology has gained a lot of attention and hype in the last decade due to its potential to revolutionize the way we store and exchange information securely over the internet. But what is blockchain, and how does it work?

In simple terms, a blockchain is a decentralized, digital ledger of transactions that is maintained by a network of computers. Unlike traditional ledgers, which are often centralized and controlled by a single entity, blockchain ledgers are distributed and verified by a network of users. Each block in the chain contains a record of multiple transactions, and once a block is added to the chain, it cannot be altered without invalidating the entire chain. Some chains utilize “staking” or Proof-of-Stake ( often referred to as PoS ) to determine the validity of a block, others use “mining” or Proof-of-Work ( often referred to as PoW ) where thousands of individual people across the globe participate in the creation, and processing of each new block. The latter adds to the decentralized, original nature of cryptocurrency per Satoshi Nakamoto’s original whitepaper on peer-to-peer transactions.

The beauty of blockchain really does lie in its decentralized nature, which aimis to eliminate the need for a trusted intermediary such as a bank or government agency to validate transactions. Instead, the network of users collectively verifies transactions and maintains the integrity of the ledger.

So how does this work in practice? Let’s say you want to send some money to a friend using a blockchain-based payment system. You initiate the transaction by broadcasting it to the network of users, who then validate the transaction and add it to a block. This block is then added to the existing chain of blocks, forming an unbreakable chain of transaction records.

Each user on the network has a copy of the entire blockchain, which means that any attempt to tamper with the ledger would be immediately detected by the network. This makes blockchain a highly secure and trustworthy way to store and exchange information.

In addition to its security benefits, blockchain also has the potential to streamline a wide range of industries by automating processes and reducing the need for intermediaries. For example, blockchain can be used to create smart contracts, which are self-executing contracts that automatically enforce the terms of an agreement. This can greatly simplify the process of buying and selling goods and services online, eliminating the need for costly intermediaries such as lawyers and escrow agents. As of 2023, crypto as a payment method is slowly gaining steam in ecommerce and physical locations across the globe – but has yet to be truly adopted on a massive scale for eCommerce like PayPal or Square for example.

To put it simply, you can tell your friends that “blockchain is a decentralized, digital ledger of transactions that is maintained by a decentralized network of users”. Blockchain truly offers a highly secure and trustworthy way to store and exchange information, and has the potential to revolutionize a wide range of industries by streamlining processes and reducing the need for intermediaries.