Since 2017, the blockchain market has grown dramatically.
Every day, more and more people are learning about digital currency and blockchain technologies.
And that means more and more people are asking questions about how blockchain can revolutionize many of our modern systems.
We wrote this piece for those people.
The team at Token Authority decided to put together a "what is blockchain" refresher piece.
Now, this piece may be fairly basic for you long-term readers, but a refresher never hurt.
A basic understanding of blockchain technology can prove helpful for any investor.
So let's get started...
A Few Technical Basics of Blockchain
Before we dig into the various applications of blockchain technology, we want to cover some of the technical aspects of blockchain software.
In the simplest of terms, a blockchain is a distributed database used for storing information.
If you're trying to picture it, think of it as a giant jumbled spider web with no central point.
Information is scattered across the network, keeping it safe from malicious DDoS attacks. Encryption is also used to secure the information.
Blockchains can be both public and private.
A good example of a public blockchain is Bitcoin. Everyone has access to the Bitcoin blockchain, and all the transactions that take place on it are public. An example of a private blockchain is the IBM blockchain, which was developed by IBM as a software product to market. In this case, IBM controls the blockchain.
Blockchains can also be centralized or decentralized. When a blockchain is decentralized, it lacks a central controlling entity.
A good example of this, once again, is Bitcoin.
Now, all of what you just read is pretty technical.
And while that information is valuable, it doesn't really answer the BIG question.
What is it exactly that makes a blockchain valuable?
The truth is that blockchains derive value from their unique functions, which are truly unlike anything we've ever had before...
How Blockchains Function
In order to understand how blockchains can be used, it's good to look at the exact problems they can help fix.
In today’s world, we exchange things all the time. However, in order for those exchanges to take place, one of three things needs to happen: the individuals exchanging the item or data need to trust each other, engage in a legal contract, or involve third parties.
In each of these cases, there are usually complications, including excess expenses and wasted time.
You can think of blockchain as a fourth option. It allows individuals to exchange things without having to go through a third party or waste time.
Now, let's look at an example...
A good example of blockchain technology, and maybe the best known, is the Bitcoin blockchain.
Many investors have realized that the Bitcoin blockchain is public and that the exchanges on it are public to everyone. When individuals move money through the Bitcoin blockchain, there's a record of the transfer. The transfer is also safe and secure.
Other blockchains have taken the Bitcoin model a step further.
One of these is the Ethereum blockchain, which allows users to deploy smart contracts. What that means is money will only move between individuals if certain parameters are met.
There's immense value in this kind of tool — enough to attract the attention of Fortune 500 companies.
All over the globe, companies have turned to blockchain to help better their businesses, make things easier for customers, and develop efficient processes.
All you have to do is look at some of the companies in the digital currency space. Many of these projects are attempting to revolutionize the internet. And they're making investors a pretty penny in the process.
Now is the time for investors to be paying attention. Over the next few years, the blockchain sector is expected to grow dynamically.
In a recent report, Netscribes estimated that the global blockchain market will surge at a compound annual growth rate (CAGR) of 42.8%. That's incredible growth, especially when you compare it to the growth of other technology mega-trends. Blockchain estimates outflank the estimated CAGR of both the artificial intelligence (AI) market and the augmented reality (AR) market over the next four years.
The total value of the blockchain market is expected to surpass $13.9 billion by 2022.
Blockchain can benefit many industries, including AI, cybersecurity, fintech, and health care. More importantly, while we head toward adopting the Internet of Things (IoT) network, blockchain will have a big role to play, providing seamless interaction between a global audience and machines. Blockchain technology is currently dominating the realm of cross-border payments, fueled by use from companies like Ripple Labs.
If you want to learn more about blockchain technology, make sure to check out the other educational resources that are available on our website. Just click here.
Best of luck with your investments.