Blockchain is a digital, public record that records online exchanges. Blockchain is the core technology of cryptocurrency like Bitcoin. A blockchain encrypts, verifies and permanently records transactions, ensuring the integrity of a cryptocurrency. A blockchain is like a bank ledger, but it is open and accessible to those who use cryptocurrency.
When you swipe your credit card at a store, the charge has to go through a financial institution like a bank. Which confirms the transaction, debits from the cardholder’s account and also, transfers the charge to the retailer to finish the deal. This can be costly – banks charge a fee for the service – and are unsafe for users, as recent hacks have been shown on Target’s point-of-sale system. There is also the possibility of credit card fraud, which costs millions of dollars a year in the United States.
Blockchain solves this problem. As its name implies, a blockchain is made up of a series of “blocks”. Blockchain software records every transaction in the block without the help of any third party, such as a bank or payment processor. Blockchain algorithms automatically encrypt and authenticate transactions, which is immediately visible to all users, reducing the risk of fraud. The details of the exchange incorporate no private or identifying data.
Blockchain technology was invented to manage Bitcoin, the first and most popular cryptocurrency. Some new platforms, such as Ethereum, employ a blockchain to provide a digital ecosystem for efficiently distribute cryptocurrency computing. At Ethereum, blockchains work call smart contracts to meet certain conditions before offering a service.
Asgaro, lead singer of the Norwegian black metal band Heimskringler, has seen its earnings decline since the band’s label increased their cut. Asghar understands that he can increase his income by selling directly to the fans. He decide to use the blockchain not only to register his band’s awesome riffs and bad lyrics. But, also to set up a smart deal that allows users to purchase Heimskringla’s records and products by paying a certain amount for a particular cryptocurrency. Heimskringla’s intellectual property registrations and purchases of products from the band are both record securely and permanently.