TechCentralTechCentral
    Facebook Twitter YouTube LinkedIn
    Facebook Twitter LinkedIn YouTube
    TechCentral TechCentral
    NEWSLETTER
    • News

      Floods blamed as gov’t falls behind in set-top box roll-out

      24 June 2022

      Vumacam announces big Jo’burg expansion drive

      24 June 2022

      Eskom crisis spirals: stage-4 power cuts this weekend

      24 June 2022

      Illegal strike at Eskom could make load shedding worse

      24 June 2022

      State capture probe ends but South Africa remains ‘broken’ by corruption

      23 June 2022
    • World

      Amazon has a plan to make Alexa mimic anyone’s voice

      24 June 2022

      Apple, Android phones hacked by Italian spyware

      24 June 2022

      Zendesk nears buyout deal with private equity firms

      24 June 2022

      Crypto crash survivors could become ‘tomorrow’s Amazons’

      23 June 2022

      Tether to launch a stablecoin tied to the British pound

      22 June 2022
    • In-depth

      The great crypto crash: the fallout, and what happens next

      22 June 2022

      Goodbye, Internet Explorer – you really won’t be missed

      19 June 2022

      Oracle’s database dominance threatened by rise of cloud-first rivals

      13 June 2022

      Everything Apple announced at WWDC – in less than 500 words

      7 June 2022

      Sheryl Sandberg’s ad empire leaves a complicated legacy

      2 June 2022
    • Podcasts

      How your organisation can triage its information security risk

      22 June 2022

      Everything PC S01E06 – ‘Apple Silicon’

      15 June 2022

      The youth might just save us

      15 June 2022

      Everything PC S01E05 – ‘Nvidia: The Green Goblin’

      8 June 2022

      Everything PC S01E04 – ‘The story of Intel – part 2’

      1 June 2022
    • Opinion

      Has South Africa’s advertising industry lost its way?

      21 June 2022

      Rob Lith: What Icasa’s spectrum auction means for SA companies

      13 June 2022

      A proposed solution to crypto’s stablecoin problem

      19 May 2022

      From spectrum to roads, why fixing SA’s problems is an uphill battle

      19 April 2022

      How AI is being deployed in the fight against cybercriminals

      8 April 2022
    • Company Hubs
      • 1-grid
      • Altron Document Solutions
      • Amplitude
      • Atvance Intellect
      • Axiz
      • BOATech
      • CallMiner
      • Digital Generation
      • E4
      • ESET
      • Euphoria Telecom
      • IBM
      • Kyocera Document Solutions
      • Microsoft
      • Nutanix
      • One Trust
      • Pinnacle
      • Skybox Security
      • SkyWire
      • Tarsus on Demand
      • Videri Digital
      • Zendesk
    • Sections
      • Banking
      • Broadcasting and Media
      • Cloud computing
      • Consumer electronics
      • Cryptocurrencies
      • Education and skills
      • Energy
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Motoring and transport
      • Public sector
      • Science
      • Social media
      • Talent and leadership
      • Telecoms
    • Advertise
    TechCentralTechCentral
    Home»In-depth»Demystifying the blockchain: a basic guide

    Demystifying the blockchain: a basic guide

    In-depth By The Conversation13 July 2016
    Facebook Twitter LinkedIn WhatsApp Telegram Email

    blockchain-640

    Most people agree we do not need to know how a television works to enjoy using one. This is true of many existing and emerging technologies. Most of us happily drive cars, use mobile phones and send e-mails without knowing how they work. With this in mind, here is a tech-free user guide to the blockchain — the technology infrastructure behind bitcoin and many other emerging platforms.

    What does the blockchain do?

    The blockchain is software that stores and transfers value or data across the Internet.

    What can I store and transfer using the blockchain?

    To use the blockchain, you will need to set up an account or address (a virtual wallet). At this time, the most popular use for the blockchain is to make micropayments with virtual currencies. For example, you can buy bitcoin with real money and then spend it on the Internet using the blockchain.

    Authorising a payment using the blockchain is similar to using a credit card to buy something online. Instead of a 16-digit credit card number, you provide the vendor with a unique string of numbers and letters generated for each transaction. With this unique identifier, the blockchain can verify and authenticate the transaction.

    Can I use the blockchain to transfer real money?

    Not yet. Some companies are using the blockchain to make international financial transfers, but most of these transactions are enabled by bitcoin or other digital currencies. Exchanging real money for bitcoin incurs fees for the sender, but the benefit is speed, security and convenience.

    How is transferring value or virtual currency on the blockchain different from transferring money from my bank account?

    Depending on the amount and the destination, when you transfer money from your bank account, your bank will limit the amount you can transfer. Most banks impose daily limits for all transactions. When you use virtual money on the blockchain, there are no limits.

    When you transfer value or currency from your bank account to an account with a different bank or other financial institution, the transfer can take days. When you use the blockchain, the transfer is immediate. If a transfer from your bank account puts your account into debit, your bank will charge you a fee. The blockchain will not allow a transfer in excess of your balance and so your virtual wallet will never be in debit.

    How is storing value using the blockchain different from keeping my money in a bank account?

    Bank accounts and credit cards are vulnerable to attack from fraudsters and hackers. The blockchain is a more secure way to store and transfer funds, particularly if you keep a modest value in your virtual wallet. Hacking the blockchain is difficult, time-consuming and expensive. No one breaks into Fort Knox for just US$500. Of course, value stored on the blockchain will not earn you interest or improve your credit rating; and the blockchain will not lend you money to buy a house or car. The blockchain does not replace your bank, but very soon banks will be using the blockchain, too.

    How is transferring data using the blockchain different to attaching a file to an e-mail?

    Unlike e-mails with attachments, the blockchain enables the immediate transfer of data no matter how big the file. Also, there is less danger of spam or viruses and no need for firewalls or junk folders.

    How is storing data using the blockchain different to storing my files on my computer?

    If you lose or break your computer or if it is attacked by a hacker or virus, you could lose that data. The blockchain resides in the cloud. Like any Web-based storage, you just need your username and password to access your data from anywhere at any time.

    What else can I use the blockchain for?

    Very soon the blockchain will be used for online transactions. It will enable smart contracts, crowdfunding and auctions. It will verify the provenance of artworks and diamonds; transfer title to real estate and other assets; and store information about people, products and property. Apps for music distribution, sports betting and a new type of financial auditing are also being tested.

    Why is the blockchain described as “riskless”?

    The blockchain verifies and authenticates both ends of each transaction. It will not release a purchaser’s funds until it has checked that the vendor will deliver as promised.

    Is the blockchain safe?

    Standards and regulations are needed so that the technology can be readily used across different organisations, industries and jurisdictions. Blockchains can be private (like an e-mail) or public (like Facebook), so users need to know which type is being operated before joining a new blockchain.

    My tips for safe use of the blockchain are: keep your virtual wallet details secure; do not let an unknown third party hold virtual currency or data for you; and do not provide your online banking details to anyone. As seen in a recent attack on a crowdfunding project, the blockchain is at its most vulnerable when significant value is stored in a single address. The blockchain may be trustworthy, but the people on it might not be.The Conversation

    • Philippa Ryan is lecturer in civil practice and commercial equity, University of Technology Sydney
    • This article was originally published on The Conversation
    Bitcoin blockchain Philippa Ryan
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email
    Previous ArticleMore SABC protests planned
    Next Article Broadlink in big network expansion

    Related Posts

    The great crypto crash: the fallout, and what happens next

    22 June 2022

    Crypto lenders face a DeFi drubbing

    21 June 2022

    Crypto industry gripped by anxiety

    20 June 2022
    Add A Comment

    Comments are closed.

    Promoted

    Watch | Telviva One: adapting to the requirements of business

    24 June 2022

    Huawei P50 now available for pre-order in South Africa

    23 June 2022

    Calabrio paves way for SA’s cloud contact centre WFO journey alongside AWS

    23 June 2022
    Opinion

    Has South Africa’s advertising industry lost its way?

    21 June 2022

    Rob Lith: What Icasa’s spectrum auction means for SA companies

    13 June 2022

    A proposed solution to crypto’s stablecoin problem

    19 May 2022

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2022 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.