Why blockchain was created? why did it all come about? why is it now become a big thing what is going on there? So this is an article we are going to explain a couple of the basics as to what it all is and why it came about.
So in order to really understand this What Is Blockchain and Why blockchain was created? we need to go back to 2008 when we had the big financial crash. The financial crisis of 2008 which I’m sure we’re all familiar with ultimately left people with a pretty sour taste in the mouth when it came to the global banking sector, but ultimately for the first time the public really lost trust in the banks and the banking kind of system.
Now without going into kind of too much technical detail about the fractional reserve banking system and moving away from the gold standard. There is kind of lots of really interesting things that became kind of pertinent to the average person’s mind around that time, but the bottom line was that a lot of people now understood that the banks had pulled a lot of bad stunts. We lost a lot of faith in them and ultimately people wanted to try and do things without them.
Why do we need these banks these third parties to regulate and mandate our funds surely if we’ve seen that they’re lying and cheating and doing things they shouldn’t have been doing? How do we avoid using them at all that really was the kind of brainchild behind where we now have ended up you know 14 years later.
So ultimately what this led to was a group of people so we think under the pseudonym of Satoshi Nakamoto. And what ended up happening there was they ended up creating a new type of digital cash, because up until that point in 2008, 2009 if I wanted to pay you or you wanted to pay a friend it was impossible to do so unless you were physically next to them with any type of mechanism that didn’t involve a third party.
So if you were standing next to me I could give you some cash and that would be a form of payment and that doesn’t really involve anyone else, but let’s say for example you’re you know sat behind your computer screen watching this and I want to pay you. We obviously need to use a third-party payment processor be it PayPal or Amazon pay or a bank or a credit union or some type of company that sits in the middle between me and you. And ultimately once the money’s left my account and gone to yours I have no control over it and you have no control over it up until the people in the middle work that out and it gets to you. So this is the kind of thing that people wanted to remove.
Why Bitcoin was created?
Because the banks had made all these mistakes in the past 2008,2009 and that’s fundamentally what Bitcoin was created for. Bitcoin was the first kind of digital cash that removed the need for any type of third party I could pay you as a peer-to-peer transaction without any bank government or external regulator to be able to make that happen. Nothing could stop that payment from moving through and it was a really great way to be able to move money around the world.
Fundamentally what this did was in order to kind of replace the kind of the third party which you know their action really was the mediation of trust. I trust the banks to give you the money in a classical payment. In order to kind of avoid people just making Bitcoin out of thin air, you know there needed to be some type of authority in order to be able to make that a real thing. In order to justify that my coins are real, they’ve gone to your account which is also real and became known as the blockchain ledger.
Effectively think of it like a really posh spreadsheet in which all the information of transactions is kept. And in order for one coin to move to another, that would be stamped as a kind of official transaction but critically rather than one entity being able to see that transaction. The blockchain of Bitcoin as is to this day was entirely public. So that meant me or you or anyone else could go onto a blockchain explorer and check what had happened from this Bitcoin wallet to that Bitcoin wallet.
This effectively meant that instead of trusting one person to verify that the transaction between two of us was good the third party we’re now able to remove them by proxy of everyone publicly being able to check that that transaction happened.
Why blockchain was created?
Why blockchain was created? So in a working example if I sent some Bitcoin for my address to your address. You would never be able to say that Josh didn’t send me the money because everyone would be able to see that it left my account and went to yours, and that’s kind of the fundamental beauty of what blockchain did.
What Is Blockchain and Why blockchain was created? Well, Blockchain is a new type of data transfer technology that we have been able to digitize human trust, and that is a really really big deal for business, commerce, and actions. And that’s fundamentally why the technology now has kind of moved away from a digital payment in terms of Bitcoin. Now we have hundreds of different types of companies using that same technology for a whole myriad of different business use cases, from insurance protocol supply chain Ledger’s stock and delivery systems every single transactional record can be entered into this system. So that nobody can ever say something didn’t happen or did happen when it didn’t.
Related: Top Blockchain Use Cases
So ultimately the kind of basic premise is don’t trust the humans trust the machines. A little bit kind of scary and some of those crazy sci-fi films that we’ve seen but none of this works very very well and to this day as it stands the Bitcoin blockchain has never had a false transaction and hasn’t had any kind of hacks or codes contrary to popular belief. And again some of those come from different overhangs where the coins were not necessarily the ledger and the blockchain itself.
Related: What is cryptocurrency?
So it’s today forming one of the world’s most secure data networks and that’s ultimately one of the reasons why or came about in order to be able to remove the need for third parties which for businesses is, of course, faster cheaper, and more economical.