Blockchain technology was introduced in 2008 along with the digital currency, the Bitcoin. Given this close relationship the two are often confused and it is important to draw a clear distinction among them.

In essence, Bitcoin is the digital currency while Blockchain is the technology that enables moving digital currency or assets (think of it as the VISA circuit).

In this article we focus on understanding the definition and basic mechanics of the Blockchain as well as some of the advantages and challenges that come with this technology.

Understanding the term Blockchain

Each ‘block’ in the Blockchain is made up of computer code containing data and can be programmed to represent anything from money (as in the case of the Bitcoin) to a birth certificate. Every single ‘block’ is connected to other blocks securely through encryption, hence the ‘chain’. This ‘chain’ can be compared to the likes of a traditional database as it contains an aggregation of data.

The Blockchain taken as a whole can be compared to an accounting ledger which contains a record of transactions. Instead of recording transactions on paper or on a local ERP software the Blockchain relies on a ‘Distributed Ledger’. In practical terms, the Blockchain is just another name for the distributed ledger (while not completely correct [1] this is how the term is commonly used).

To view the full article please click more