What is it?
A blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. Think transferring funds to your family member in a different part of the world securely, without a middleman or a 3rd party like a bank.
- Source: The Truth About Blockchain, Harvard Business Review
Oh, so like Bitcoin?
Not really. Bitcoin is the first application of blockchain technology which uses the concept of the distributed ledger. Just like how the bicycle is an application of the wheel, Bitcoin is a cryptocurrency, which is an application of blockchain technology.
What other applications of blockchain are there?
Just to name a few, banking and payment technology (e.g. Ripple, Omise-go), Supply Chain Management (e.g. Ambrosus, Provenance, Blockverify), Energy sharing (e.g. Power Ledger, Grid+), and Healthcare (e.g. Robomed Network, SimplyVital Health. Click here to see a larger list of industries that the blockchain will disrupt.
Can governments ban Bitcoin / cryptocurrencies?
They cannot as cryptocurrencies exist in the form of a distributed ledger. The keyword here is distributed, and there is no central institution or group that can be identified by governments to meaningfully control it. A VPN (Virtual Private Network) can be used to easily circumvent any attempt by a country to ban transactions within its borders.
What’s so great about cryptocurrencies VS today’s currencies?
This is a huge topic here, but in essence, cryptocurrencies are not controlled by a specific country’s government and eliminate the need for a bank/intermediary. Both are a store of value and a medium of exchange. Also, governments cannot freeze a person’s cryptocurrency wallet as only the person who has the private key has access to the wallet. Click here to find out more about this topic.
Why shouldn’t I leave my coins on exchanges like Coinbase / Bittrex / Poloniex / Binance?
When you leave your coins there, your funds technically are controlled and owned by that respective exchange as you do not hold the private keys to the wallet where your funds are. The exchanges own the private keys.
This is akin to putting your money in a bank, and the bank takes care of it and you can withdraw funds whenever you like. However, if the bank suddenly becomes bankrupt overnight, your money is gone. In the same way, if the exchange goes bankrupt, gets hacked (which has happened multiple times) or the owners disappear, you have no claim to your cryptocurrencies stored on the exchange. Moreover, exchanges regularly restrict withdrawals of certain cryptocurrencies due to maintenance of their systems. Some of these “temporary maintenance” phases last up to a few weeks, impeding access to your funds.
What are the safest ways to hold / store my cryptocurrencies?
The best way is to get a hardware wallet via Ledger or Trezor.
If you don’t want to go through the trouble (or pay the price) but want a safer alternative to exchanges, create your own wallet where you hold the private keys. Click here for a list.
Read more about the latest insights below and how startups are using blockchain to solve real world issues.