What is it..?
A blockchain is a well-thought out but simple way to pass information between two parties in a secure and fully-automated way. A blockchain is a chained set of records called blocks that are connected using cryptographic principles. Each block contains an encoded hash of the previous block, along with a timestamp and data relating to the transfer of data (transaction). To break it down farther, a block is a bit of digital data (a block) that is stored in a public database (the chain). This public ledger of sorts acts as a way to deter fraud.
How does it work..?
The first party begins the process by creating a block, which is then transmitted to the public ledger and verified by thousands of computers around the world. Once the block has been verified, it is added to the chain, stored across the net.
Blocks store three types of information. First, blocks store information about the transaction itself: date, time and amount of transfer. Next, blocks store data that identifies the purchaser and the seller, without using names. Instead, unique digital signatures are used, so transactions remain anonymous but still traceable and verifiable. Finally, blocks store information that distinguishes each transaction from others.
Once a block has been fully verified, it receives a unique hash, or code, that identifies it as part of that specific transaction. Similar to the transaction ID on a paper receipt, this code can distinguish between identical but separate transactions. Further, the new block is also given the hash of the most recent block added to the chain. This unique digital trail is another way blockchain avoids fraudulent transactions.
Because a single block stores up to 1MB of data, thousands of transactions can be stored on one block. The digital signatures and unique hash identifies them as separate transactions.
Why does Cryptocurrency use it..?
Blockchain technology is not controlled by any central authority, it is theorized to be somewhat immune to government control and interference, and is virtually fraud-proof. Blockchain offers users anonymity in a secure environment that ensures the integrity of the transaction. This eliminates a lot of the risk for buyers and sellers, but also lessens or does away with costly transaction fees that banks and other financial institutions charge for wire transfers and other transactions.
How can it change the current market..?
This newer method of digital record-keeping employing a public ledger of transactions is both fraud-proof and transparent. Despite its occasional volatility, many experts believe that it can fundamentally change the way that many markets and industries operate, including digital marketing.
To begin with, the transparency and privacy of blockchain and block data is attractive in a time when ISP’s, social media, and even search engines are mining, storing, and selling our personal data for profit. Blockchain is most notably used in the cryptocurrency markets, but it is expanding into other industries as well. Blockstack is working to provide a decentralized internet experience in which users keep personal data personally, and no server or provider keeps a running list of activity for any user. Skywire aims to reshape the world of internet privacy through blockchain technology. Without all of the personal data currently available to marketers, targeted ads might need a complete revisit and revamp as a strategy. Brave’s founders intend to use BAT (Basic Attention Token) technology to target fewer ads, but compensate users who opt in to view the ads. Basically, Brave is telling consumers that their time and attention is valuable and compensable.
As for financial markets, cryptocurrencies could theoretically offer the world an alternative to the US Dollar as the standard currency. Its position has been challenged more than once, and when its value tumbles, the entire world’s economy feels it. Decentralization of the dollar as the world standard is not out of the question with the evolution of cryptocurrencies.