Blockchains
What is a Blockchain?
In simple terms, a blockchain can be thought of as a distributed system used to keep virtual records. While digital record-keeping has been widely used for decades, blockchain technology is unique because it allows records to be kept in a way that is decentralized, trustless, accessible, and transparent. Blockchain systems are the backbone of crypto and web3.
Blockchain is considered one of the most disruptive technologies because its decentralized and trustless nature ensures that the truth of a state (facts, data, financial balances) is kept and maintained without relying on any centralized third party (centralized databases, financial institutions, or any authorities) and can be openly accessed by anyone with an internet connection, anywhere in the world.
Why Decentralization Matters
All of the digital tools we rely on today are provided by centralized organizations that have the power to revoke access at any time for any reason; therefore we, as users, must play by their rules. For example, if you use your debit card to transact somewhere your bank doesn't approve of, your bank has the power to freeze your funds. If you wish to send money internationally, you must wait to do so during a bank's business hours and pay the excessive fees demanded. Or if you share something on social media that doesn't align with the views of those who run the platform, the platform can delete your account.
So long as people are using their products or services, centralized organizations have the power to be the judge and the jury. This is not to say that all centralized organizations are bad - in fact, most are good - but rather to point out the concerning amount of power these organizations have over their users.
Characteristics of Blockchains
Decentralized
Trustless
Accessible
Transparent
Decentralized
Unlike other virtual record-keeping tools, blockchains are not maintained by a single person or an individual organization. Most blockchains are maintained by large networks of participants with no centralized party to take charge or coordinate. Different blockchain consensus mechanisms are used to ensure that blockchain infrastructure providers are financially incentivized to follow a hard-coded rule and operate in the same (and only) way to keep a blockchain operational and securely decentralized. By aligning the interests between infrastructure providers and users, blockchains are able to maintain decentralization.
The decentralized networks that blockchains run on help ensure that the data being added to the virtual record is accurate and cannot be changed. Data that is added to a blockchain is recorded by the entire network of participants in order to ensure it cannot be quietly manipulated or altered. Most of blockchain technology’s popularity can be attributed to its decentralized nature. Blockchain’s ability to maintain decentralization is what allows it to be trustless, accessible, and transparent while providing self sovereignty for users.
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