The blockchain technology is the next big thing and is currently the hot topic of the market. It is an open decentralized database where every transaction that has taken place since its inception gets stored in the form of ‘blocks’. It is a technology that saves time, effort and reduces chances of fraud since it’s an open network.
For a layman, it might be slightly difficult to understand what exactly it is. Hence let’s try to understand the technology with the help of Bollywood. This new technology is posing a major threat to centralized traditional forms of transactions. Let’s try to understand them first before we move on.
Two types of values have been in existence for a long time, bearable and registered values. Bearable values are something which is concrete and can be touched by us. For example, cattle, goods, notes and currencies which are government backed are all bearable values. Registered values are something like bond papers. They act as proof for your ownership of any property or commodity.
The best thing about blockchain is that it eliminates the need for a middleman. Let’s consider the role that the censor board plays between films and the audience. It regulates and wields control over the film and how it will be finally presented to the audience. Similarly, if we consider the banking system in India, it has to deal with the Reserve Bank of India, as well as companies like VISA and MasterCard. Also, centralized sources like UBER and Ola are prone to be hacked by third parties which blockchain prevents on its own network.
Let’s consider that one fine day actors from the movie industry want to use the blockchain technology to transfer money to each other. Let’s say Shah Rukh Khan has to send money to Kajol. He announces it with his autograph and it is immediately recorded by his crew and stored in their cameras and computers. The ledger is accessible to all, unlike bank systems. This ensures that there is transparency and the more people start getting involved in the chain, the stronger it becomes.
Now let’s look at how this analogy fits into the technicalities of the blockchain. The autograph in blockchain is known as the private key of the sender. The crew acts as the nodes of the blockchain. The process of recording is called “proof of work” and the reward to the crew is known as an incentive.