User Guide For First Time Investors Eyeing Blockchain Technology

This article is written by Brian Malika, a Contributor Author at Startup Turkey.

What is blockchain?

 I know you expect a simple and clear answer on what is blockchain and I won’t disappoint you. So, for that matter, blockchain is a continuous growing list of record called blocks which are linked and secured using some sort of a bond called cryptography. Take for example a filing system that keeps receiving content to store and this content being stored can be linked to each other but at the same time secured in such a way that an unauthorized person cannot access this stored data.

If you get the above concept of filing system that keeps growing with data that is highly protected then you basically understand the whole clue of what blockchain technology is.

For that matter, blockchain is a new toolset on the internet that is like an auto book which you can only write once and read-only.   This means that, once you store data only through the blockchain technology then there is no way someone else other than the one who has permission can alter the stored content.

Up to this point am confident that you have a clear thought of what blockchain technology is. For that matter,  in our out next paragraph we are going to dissect the components that make blockchain to work.

Five Components That Facilitate The Functioning Of The Blockchain Technology

In order for the blockchain technology to be operational, then the following components must be put in place. And they include :

(1.) Cryptography

(2.) P2P Network

(3,) Consensus Network

(4.) Ledger

(5.) Validity Rules

                                              (1.) Cryptography

When records are stored within the blockchain technology world sometimes they have to be related based on the sequence or purpose that the person who has permission to access the has. And considering that the blockchain technology does store important and confidential information then it's important to ensure the highest form of data security there is. And that is where cryptography comes in which is the technology that linked the stored data where commanded and also provides a bond for high-level security.

As an investor, the cryptography ensures that you're valuable financial, supply and any other company information that is stored in blockchains is secure and can be only be edited or accessed by an authorized person within the system.

And mark you, you can trace every movement that the authorized  person. Took while working with the company data that is stored in blockchains.  Blockchains promise to ensure high level of transparency because of this cryptography feature.

So, what happens with the securely stored data then? The answer to this question is in our next paragraph.

                                               (2.)  P2P Network

Now that the cryptography feature promises high-level security and linking of stored data within the blockchain technology I would imagine that every investor out there would prioritize to trade with companies that meet the level of data security as that of blockchain technology. And that is why the P2P Network comes in.

The P2P Network offers some form of peer to peer interactions for companies and even individuals that want to trade by sharing their data through blockchain technology.

Through the P2P Network, you as an investor will have cut down costs that you would otherwise contract a lawyer to witness the business transactions that you process with your business associates. This is once a business transaction is activated by the involved business partners who are permitted to use the blockchain technology then nothing can be altered, lost or manipulated ever again. Thanks to the high-level data security offered by the cryptography feature on the blockchain.

So, in case an investor wants to officially change a business agreement or just to get rid of data in their blockchain account then what would be the procedure since the system is very secure? Well to answer this question I would request you to humbly scroll down to the next paragraph.

                                             (3.) Consensus Network

Well, just because I have mentioned that the blockchain technology is very safe for storing data doesn’t mean that once you keep your data in there then you can’t retrieve it. Of course, if you are not permitted by the system then you cannot retrieve or alter the data stored in the blockchain.

But in the event that a permitted blockchain account operator wants to retrieve or alter stored data then we have the feature or command called the Consensus Network.

The consensus network uses an algorithm that facilitates the blockchain account holders to give their permission to share information and command transactions with other blockchain users within the network. Even those these transactions are confidential, they can all be tracked if need be.

But before you even think of asking another investor you have a blockchain account for the possibility of transactions, you first need to organize your data with the intent of your projected business in mind. And that is how our next paragraph comes in. Am sure you want to know this. So keep reading.

                                              (4.)  Ledger

Basically, the ledger is a blockchain technology feature that shows everything that has taken place on your blockchain account. The ledger is very safely guarded through the cryptography technology so that no one can manipulate the history of your transactions as an investor.

Now that you know how the blockchain system works and coordinates with each tool you only need to understand the rules of the industry. And that is all catered for in our next paragraph.

                                            (5.) Validity Rules

Every organized system everywhere must have rules for reference in case things don’t run as anticipated or whenever conflict arises. And this is how validity rules come in.

So basically, before having your blockchain account to be activated, you will have to sign and agree to abide by certain rules and regulations.

These rules and regulations spell the measures taken in case of conflict or rare situations that occur while using your blockchain account network.

Now, your good to go.  With the above five components that facilitate the functioning of blockchain technology in mind, you should be able to comfortably make informed decisions while making the important decision on how to start running your business or investing in a start-up that employs the blockchain technology model.

Lastly,

I  want you to note that blockchain is different from bitcoin. Bitcoin for that matter is an online trading currency that in most countries is regarded as an asset and not a currency. Further bitcoin uses the blockchain technology as its basis for functioning. Please don’t confuse the two in as you plan to invest.

Finally, you should know that blockchain technology is very safe for you as an investor who values the transparency of start-up functioning and also the safety of your business data.

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