Blockchain in a nutshell.

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Is blockchain bitcoin?

This question has been asked by almost everyone who has a little or no idea about bitcoin. For this question to be answered, we have to know what blockchain is.

Blockchain is a time stamped series of immutable records of data managed by a cluster of computers, it is not owned by a single entity.

Bitcoin is cryptocurrency, a digitized money kept alive due to the blockchain technology. When blockchain technology began to exist, bitcoin was the first platform. Since Bitcoin was the first application on the blockchain technology, one might say Bitcoin is Blockchain and that could make sense. To answer the question above, blockchain is not bitcoin.

Blockchain is so complex that there are very few humans who understand each part of it. This complex technology was an invention of Satoshi Nakamoto. No one knows if Satoshi is a man, woman or a group of people but since its creation, it has evolved into something greater.

Three Pillars of Blockchain

Blockchain is known for the following features which his made it one of the most sought after technology. They are:
- Decentralization
- Transparency
- Immutability

• Decentralization
  In a centralized system, all data are stored in one spot. You have to go to that spot to get any information required. In a decentralized network, information is not stored in a spot, every network has access to the information. In a centralized network, between the giver and the receiver is a third party but in a decentralized network, there is no third party. The giver has direct access to the receiver and vice versa.
• Transparency
  In a transparency, all transactions made by a buyer or seller for instance is not hidden. Though the person’s identity is hidden by complex cryptography and represented only by their public address. Transparent transactions forces people to be honest. This is something that has never being dealt with before in the business world.
• Immutability
  This means that once something has entered into the blockchain, it cannot be tampered with. This is very useful for financial institutes since embezzlement will finally be nipped in the bud. The reason why blockchain is immutable is because of its cryptographic hash function.
  Hashing in simple terms means taking an input string of any length and giving out an output of a fixed length.
  A cryptographic hash function is a class of hash functions whose various properties makes it is deal for cryptography. This cryptographic hashing makes blockchain immutable.

I mentioned earlier that blockchain peer-to-peer network. Why does it use peer-to-peer network?
The main use of peer to peer network is file sharing which is also called torrenting. In peer-to-peer system, there is no central authority, that is, it is decentralized . In cryptocurrency, it is structured according to a consensus mechanism to create an egalitarian network.

Blockchain is mostly used in the finance sector. Since it cuts out the ‘third party’, bitcoin along side with other cryptocurrencies has been used for online transactions.

Two Kinds of Blockchain

There are two kinds of blockchain which are:
- Permissioned Blockchain
- Public Blockchain

• Permissioned Blockchain: This kind of blockchain is classified into two, the public permissioned blockchain and the private permissioned blockchain.
  The public permissioned system allows anyone to join the network but makes only a selected few take care of the consensus and the overall network. Example of this blockchain system are ripple, stellar, sovrin. Anyone can join the network, but to take part in the consensus, you have to be elected as one of the 21 block producers.
  The private permissioned blockchain is a system where members need to have permission to enter the system and only a few nodes are allowed to make administrative decisions. Many companies prefers to use this system.
• Public Blockchain: This is an open system where anyone can join in the network and participate in the protocol and also take care of the overall consensus. The data is very open for all to see since everything is public.

There are various business built from blockchain, not just in the financial world. This is because it gives users ability to create value and authenticates digital information. Some of the business that has arose, is arising and will arise from this technology are: smart contracts, crowdfunding, sharing of economy, supply chain auditing, file storage, prediction markets, identity management, data management etc.