Blockchain is finding its way into our daily lives. The following terms and answers illuminate the revolutionary technology and help to understand its key features.
How exactly do blockchains work?
Every deal documented on a blockchain is automatically stored on thousands of computers around the world. This ensures that no one can manipulate individual inputs as they would have to hack thousands of computers at the same time. A blockchain is like a gigantic Excel spreadsheet that is updated regularly and contains all the transactions that have ever been made.
What does decentralization mean?
Imagine you loaned a friend 1000 francs. You don’t know the person well, so you print two receipts. If there were only two documents, one of them could be manipulated relatively easily later on. However, because of this job, he doesn’t want to go to an expensive notary who can approve the transaction. So you distribute several copies to independent, trusted persons, who keep them separately and can prove the authenticity of the receipt in case of doubt. This means that the loan is documented in a decentralized manner and there will be no disputes or inconsistencies. Blockchains do nothing but automate this process. So you can do business directly and without intermediaries.
What problems can blockchains solve?
Blockchains ensure that individual organizations do not have too much power. For example, we can use it to transfer money to people all over the world without banks charging terrible fees. Political votes can be made where dictatorial governments cannot manipulate the results. And we can control where and under what conditions the garments were actually produced, without having to blindly trust the manufacturers.
Who will be affected by the changes caused by blockchains?
Technology is likely to transform almost every industry in the coming years. It will also have a powerful impact on our daily lives. People will benefit greatly from decentralized systems, especially in developing and emerging countries where the imbalance of power between citizens and the state is sometimes too great.
Can blockchains be used only for money transactions?
No way. Everything can be entered on a blockchain – for example, who owns a property or how you vote in a poll.
What are the problems of technology?
Since everyone has access to the blockchain, it is difficult to stay anonymous. Although users on the blockchain are indicated by their number, not their name, in some cases it is still possible to draw conclusions about their identity. Also, keeping blockchains up-to-date and secure on all computers at all times still consumes time and energy right now.
Where does the name blockchain come from?
Transactions are entered in blocks into tables, which provides additional security. These blocks are encrypted, linked together and therefore cannot be manipulated cryptographically, that is, with special codes – hence the term cryptocurrency.
What is it about cryptocurrencies?
Almost every blockchain has its own “coin”, which is a digital coin used to power the system. However, the term cryptocurrency is misleading because not all coins are used as a digital means of payment, as is known from Bitcoin. In some cases, this is only used to pay the fee for logging into a blockchain. And in other cases, coins are nothing more than stocks, that is, shares of companies developing a blockchain. The English term “token”, which means coin in German, is therefore better than a coin.
What is an ICO?
The letters stand for Initial Coin Offering. This is called when the developers of a blockchain first sell coins to interested customers. The company is then further expanded with the money raised – this is a kind of start-up capital.
What role does Switzerland play in this development?
In recent years, entrepreneurs from all over the world have come to Switzerland to conduct an ICO here. This is mainly due to the lax laws in this area. This is why Switzerland is also known as the Crypto Valley. In 2021, more than 1100 companies were registered in Switzerland and Liechtenstein. The sector created employment for 6 thousand people.
How can technology be used today?
Currently, there are relatively few blockchain applications that are of interest to ordinary people. There are several shops where you can pay with Bitcoin, and there are tech-based platforms and games on the Internet. But until now, most users have bought crypto just to speculate.
How many different blockchains are there?
There are thousands – and more every day. Each blockchain has a different purpose: some are designed to store monetary transactions, while others are used in the insurance or real estate industries.
How long has blockchain existed?
The idea was first presented online by Satoshi Nakamoto in 2009 after the global financial crisis. To date, however, it is not clear who was behind this nickname and thus the revolutionary invention. Bitcoin was the first application of the technology, but now blockchains have been shown to have much more potential than originally thought.
When will blockchain applications become mainstream?
Almost every major company—regardless of industry—works heavily with technology right now. At the same time, hundreds of start-ups have sprung up developing their own blockchain applications over the past few years. A lot of money is invested, and universities include courses on this subject in their undergraduate programs. Even the first blockchain course has been opened in Switzerland since 2019. Before technology can revolutionize our daily lives, some fundamental technical challenges such as anonymity and high energy consumption need to be resolved. (pzu/nim)