5 Key Concepts to Understand Blockchain

Blockchain is a Database

Blockchain is a new type of database; it distinguishes itself from a regular database because the information is shared by decentralized parties. Therefore, Blockchain doesn’t need an administrator and all transactions are recorded and confirmed in an anonymous way, no fees or third parties are involved. The big advantage is that no one can take down the system or corrupt it because no one owns it.

A New Way to Understand Ownership

Cryptocurrencies don’t exist physically. However, cryptocurrencies like Bitcoin work like money; they can be transferable and we can actually own them. The technology underlying this system is the blockchain. By creating a new record in the blockchain, users can transfer value in the form of data instead of giving away a physical coin.

The Records are Public

Anyone can access this database. In other words, anyone can verify that the information has been placed in the “block”. This doesn’t mean that anyone can access the information that block contains, since only users with a private key can access that specific information. Thanks to the encryption process, no third party can alter, damage or misuse the chain; users can only modify the information they own.

The System is Self-Regulated And Fully Secure

The system is self-regulated and entirely secure, it’s considered by many as the safest channel to execute financial transactions. The fact that third-parties are not included in the equation, protects the users and prevents them of getting scammed. The information through buyers and sellers is shared by means of “tamper-proof public ledgers”. It is intended that the equations are hard to crack, therefore the only way to validate these public ledgers is by having different agents validating data from different and powerful computers. The only way that data becomes valid is if different miners back it up on a global scale, making it impossible for anyone to tamper with it. All transactions are monitored and recorded carefully.

A World of Possibilities

The possibilities of this technology are limitless. In September 2015 the World Economic Forum published a report predicting that by 2025 10% of GDP will be stored in blockchains or blockchain-related  technology. Statements like this one has unsurprisingly attracted tech business companies such as IBM or Microsoft which have already announced services exclusively based on this technology. In the Financial Industry, major banks like Morgan Stanley or Bank of America have already declared their intentions to explore blockchains and its potential applied in finance. Removing the “human factor” out of the equation, all common transactions in any financial market can be carried out by computers in a faster and more accurate way.

Blockchain technology is behind the new industry of cryptocurrencies and is shaking many other industries at the same time. Within the legal sector blockchain facilitates the negotiation between parties when signing a contract, it helps to reduce costs and it’s completely safe, that’s why it is called Smart Contracts. Other possible areas of application of the blockchain technology are: the “cybersecuration”of political elections against fraud, the improvement of file sharing and file storage, identity management, or fueling the internet of things, etc. The potential of the blockchain technology has yet to be fully realized.

Interesting videos on Blockchain:

An Insight Into the Cryptocurrency Revolution

The Cryptocurrency Revolution

Cryptocurrencies’ market value has risen rapidly since the beginning of 2016 due to the increased interest of investors and developers. As of mid-June, the value of all currencies in circulation was around $15bn.

Investor Attraction

• According to a study published by PriceWaterhouseCoopers in 2015, investors speculating on the future possibilities of this new technology have driven most of the current market capitalization. Those investments appear to be relying on a perceived “inherent value” of cryptocurrency, which includes the technology and network itself, the integrity of the cryptographic code and the decentralized network.

Complementary Services

• The main technology underlying each cryptocurrency, the blockchain, has the potential to disrupt a wide variety of transactions, in addition to the traditional payments system. These include stocks, bonds and other financial assets, for which records are stored digitally and for which there is a potential need for additional security. The blockchain technology holds a large potential in terms of security improvement for digitally stored assets.

• Many tech developers have devoted their efforts to cryptocurrency mining, while others have focused on more entrepreneurial pursuits such as developing exchanges platforms, wallet services and alternative cryptocurrencies (such as Ethereum or Ripple).

Future Outlook

• The cryptocurrency market has only started to attract talent with the depth, breadth and market focus needed to take the industry to the next level. For the market to gain mainstream acceptance, however, consumers and corporations will need to broadly accept cryptocurrencies as a user-friendlier solution to their common transactions.

• Investors appear to be confident about the opportunities associated with cryptocurrencies and cryptography. The “inherent value” of the underlying technology, mentioned above, gives these investors good reason to be optimistic. Additionally, just recently some of the more established cryptocurrency companies attracted institutional investors and Wall Street attention. Many Banks such as Credit Suisse and JPMorgan have been testing this technology.

A General Overview - What are Cryptocurrencies?

What are Cryptocurrencies?

Cryptocurrencies are a frequently discussed topic in the financial as well as in the tech-related media. Nevertheless, digital currencies remain a mystery for many, an issue this blog aims to change. In the next blog posts the structure of these "new currencies" will be broken down, concepts will be explained in a simplified manor and operations will be anatomised, for everyone to understand.

The Key Concepts

• Cryptocurrencies are decentralised, meaning they can be used anywhere in the world.
• Cryptocurrencies are used via the Internet, making an Internet access the only requirement necessary for their usage.
• Benefits: low usage fees, worldwide access, accounts cannot be controlled externally (no one can freeze your account), no basic requirements or limits.
• The currencies and transactions are provided through a process called mining. Through an application (e.g. Genesis Mining) users provide the computing power of their devices in return for cryptocurrencies.
• The total amount of the respective currency is kept limited by simply adjusting the computing power required for mining new amounts of the currency. If a large amount of the currency is required, less computing power will be required and vice versa. 
• Cryptocurrencies can be exchanged for real currencies on several online market places (e.g. BitPanda or CoinsBank) and are stored in an online bank account there.
• Nowadays cryptocurrencies are accepted in more and more stores online as well as offline and can be used to acquire all kinds of products.

The video that can be found below briefly explains the above mentioned key concepts of cryptocurrencies using the example of their most popular representative: The Bitcoin.