RAMY ZABARAH, MULTIPLATFORM EDITOR, CNNMONEY: Cryptocurrencies like Bitcoin and Ethereum have been getting a lot of hype lately. And while some investors believe that these coins could be the future of money, other experts believe that what's actually more valuable is the underlying technology. It's known as Blockchain.
It's basically a public list of transactions, a more transparent record. You could think of this digital ledger like a game of dominoes. The Blockchain is powered by a decentralized network of computers that all work on the same task, no one owns the system, everyone helps run it.
Whenever a transaction is initiated between two computers, it has to be certified by another. That makes it difficult for anyone that cheat. For the sale to go through, a bunch of mining computers have to try and solve a cryptographic puzzle, sort of like a really complicated math problem. Once one computer solves that puzzle, a record of a successful transaction gets added to the list for everyone to see. All editions are permanent, so no one can delete or change the data. You could only keep at it.
You maybe asking yourself, what's so great about this glorified list? Well, since the ledger can't be changed after the fact, getting away with fraud is a lot harder. Blockchain advocates also argue that this technology cuts out the middleman by fulfilling the role of institutions like banks and government agencies. This means more direct access to your property, not to mention the possibility of much smaller transaction fees.
Sounds promising, but does it live up to the hype?
The exchange of cryptocurrencies is a clear use case. But Blockchain could also be useful for other types of record keeping. Let's say you're a farmer and you lose the deed to your land in a fire or a flood. If the government lost your paperwork, too, you may be out of luck. But if you uploaded that deed to the Blockchain, it's easy to prove that you own that land.
In fact, people are experimenting with Blockchain technology in a variety of places, from preventing voter fraud to storing health records, to authenticating memes on the Internet, even the very institutions Blockchain threatens to disrupt, or exploring the technology's possibilities with companies like Bank of America investing in their own Blockchain tools. But for right now, those experiments are still in the early stages and it might be a while before we see the kind of crazy Blockchain takeover that the media is talking about.