{"id":200218,"date":"2017-02-28T11:27:28","date_gmt":"2017-02-28T09:27:28","guid":{"rendered":"http:\/\/mybroadband.co.za\/news\/?p=200218"},"modified":"2017-02-28T11:29:23","modified_gmt":"2017-02-28T09:29:23","slug":"what-is-blockchain-explained-in-simple-english","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/internet\/200218-what-is-blockchain-explained-in-simple-english.html","title":{"rendered":"What is Blockchain – Explained in simple English"},"content":{"rendered":"

My usual reaction to the words “blockchain” and “cryptocurrency” involves fighting off a sudden feeling of drowsiness and quickly navigating to more exciting areas<\/strong><\/a> of the Internet.<\/p>\n

However, after learning the basics behind the technology and how it works, you\u00a0understand why people are excited about the\u00a0capabilities and power of blockchain.<\/p>\n

The basic concept of blockchain is not difficult to understand, but the implementation of the technology could change the way the world works.<\/p>\n

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Blockchain Basics<\/h3>\n

A\u00a0problem with electronic transactions is the need for a third-party intermediary like a bank to authenticate and keep records of payments.<\/p>\n

Without this, people could purchase items with money they don’t have, as there would be no record of their money being spent.<\/p>\n

Blockchain removes this need for third parties in transactions by creating a distributed record which is possessed and verified by other users.<\/p>\n

Essentially, other people keep a record of money spent and the order of transactions, removing the need for a bank.<\/p>\n

This means you can pay cryptocurrency directly to somebody else without cheating the system, relying on the consensus of other nodes in the blockchain.<\/p>\n

Other users record transactions and reach a consensus on the order of entries in the distributed ledger.<\/p>\n

The system prevents double spending and becomes more secure with a higher number of people checking transactions.<\/p>\n

The consensus-building process is conducted by people like Bitcoin miners, who earn a reward in Bitcoin for\u00a0their work.<\/p>\n

\"Blockchain\"<\/a><\/p>\n

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Blockchain vs Bitcoin<\/h3>\n

These two terms may be indistinguishable to newcomers.<\/p>\n

Bitcoin is a cryptocurrency, meaning it is a currency with value that exists only as data – but can still be exchanged in a similar manner to traditional currency.<\/p>\n

Bitcoin was created in 2008<\/strong><\/a> as a peer-to-peer cash system concept which did not require a third-party intermediary.<\/p>\n

The Bitcoin currency was a unique innovation, but it was the technology behind the peer-to-peer cash system which proved truly revolutionary.<\/p>\n

Called blockchain, this backbone is the distributed ledger technology which allows a network of users to keep a record of transactions.<\/p>\n

Bitcoin payments use blockchain technology, but blockchain can be used for other applications,\u00a0including property transfers and contracts.<\/p>\n

\"Bitcoin\"<\/a><\/p>\n

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Security and Safety<\/h3>\n

Blockchain technology requires a large distributed network, where the ledger of transactions is recorded on each point in the network and every node is independent.<\/p>\n

This distribution of data makes the system secure against fraud or interference. If a single block is forged and added to the chain, other nodes will find the data to be untrue.<\/p>\n

Redundant copies of the blockchain are always available thanks to independent nodes constantly calculating new blocks.<\/p>\n

The distributed ledger is public, but the transaction information in each block is hashed and encrypted, available only to those involved.<\/p>\n

\"Cyber<\/a><\/p>\n

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What’s in a Block?<\/h3>\n

Bitcoin miners use powerful, specialised software to collect transaction information and create blocks to add to the blockchain.<\/p>\n

These miners form part of the consensus system used to maintain the record of transactions, and they earn a Bitcoin reward for each block calculated.<\/p>\n

Blocks form part of the blockchain, and are comprised of four parts:<\/p>\n