What is blockchain technology?

If you're someone that invests in cryptocurrency you may have heard the term blockchain before. Like most new technology concepts, blockchain can be complicated to understand. Simply put, blockchain is a system of recording information in a way that makes it difficult or near impossible to change, hack or manipulate the system. You can think of a blockchain as a digital ledger of transactions that is constantly being duplicated and distributed across several different machines. Blockchain is an essential part of why cryptocurrencies such as bitcoin/ethereum can exist and become as popular as they have.

Source @ euromoney

Why is blockchain technology so important?

One of the biggest reasons that blockchain technology is valuable is because it allows us to trust digital currencies. When someone creates a new currency there are concerns about people creating money and giving it to themselves or stealing other people’s money. The blockchain helps to relieve those issues by keeping an online account of all of the transactions that are very difficult to alter. Also, the blockchain is decentralized, which means no one person is in charge of it and therefore they can’t artificially make themselves or their associates rich. This is one of the reasons that people like the idea of cryptocurrencies because it won’t allow for any one government or entity to control the financial market.

However, this may not be quite as good as some people believe it to be. While blockchain technology at this point is very secure, that doesn’t mean that people won’t be able to figure out ways to exploit this technology. Secondly, some hackers have already begun stealing other people’s cryptocurrency keys to steal their cryptocurrency. A huge example of this was the Hong Kong-based cryptocurrency exchange, bitfinex, which lost around $73 million worth of bitcoin to hackers.

Lastly, very few people have the technical knowledge and expertise to understand how this technology works. If enough highly intelligent people come together, they would be able to manipulate the market and most people would never even know about it. Although, you could argue that most people don’t know how the money market works either and that governments manipulate that process constantly. But it’s worth understanding that because this system has only recently gotten into the public eye that we are still figuring out how effective this could be for mass adoption.

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