BLOCKCHAIN TECHNOLOGY: A Simple Guide to Understanding and Implementing

Picture: Nsibidi symbol for Unity

 

INTRODUCTION

It is often believed that BLOCKCHAIN is a new invention of the 21st century. However BLOCKCHAIN like electricity had existed in various forms without a terminology to define it. It could easily be identified in the communal system especially in the African communal system: where transactions were verified at all nodes (families).

 

If the idea had been in existence, how come the name is very recent?

 

This was because we lacked the infrastructure to have implemented it. The idea of BLOCKCHAIN brought about the various economic ideologies; Socialism, Capitalism, Marxism etc.  In defining economics the problem of Wants and Scarcity arose. Human wants are insatiable while resources are always scarce

 

How did African Communal System try to address these problems?

 

A typical African community had members skilled in various arts and crafts. Each community had its broad specialty; peasants, farmers, skilled warriors, skilled craftsmen, fishermen, herbalists, etc. If one were to buy a fish, he would have placed his order or would pick from the available fisherman’s stock.

 

The price will be bargained and agreed upon. Where a party feels cheated, the matter is presented in the council for others to also judge. Debts written against debtors and fines against defaulters, everyone knew what everyone owes/owns.

 

This system could not be sustained because the human memory and other passions are not fixed, people die too. Lots of debts could not be paid; lots of wealth could not be redeemed. And for centuries new infrastructure could not fully help in solving these problems of WANTS and SCARCITY, until recent times.

 

WHAT IS BLOCKCHAIN?

BLOCKCHAIN is a type of database that branches to more databases that branch to more databases and so on inasmuch as new entrants exist; a network of databases complementing each other. Using the fish buying illustration;

  • Order for purchase of fish is placed
  • A unique address/key registers the order
  • Fish (credit value) is released from owner to buyer via unique address/key
  • Buyer incurs a debt (debit value) while taking ownership of fish
  • Details of transaction are recorded/owned/stored/saved by every single database (node or family) in the BLOCKCHAIN. Everyone’s trade (debts/entitlements)  is recorded by everyone

 

“Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system – euromoney.com

A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger. The decentralised database managed by multiple participants is known as Distributed Ledger Technology (DLT) – euromoney.com

Blockchain is a type of DLT in which transactions are recorded with an immutable cryptographic signature called a hash.” – euromoney.com

Definition of a Blockchain

According to 101blockchains.com the 6 key features of blockchain technology are;

 

  • immutability
  • decentralized
  • enhanced security
  • distributed ledgers
  • consensus
  • faster settlements

However, a blockchain is properly defined by 3 key features:

  1. Programmable: new programs can be written on the blockchain. For example, a blockchain accepting Naira program may be offered another program called Energy without altering the previous program and its allocation across the blockchain
  2. Decentralized: just like our previous example where everyone (nodes/families) documents what debts/credit is allocated in the community, everyone on the blockchain records everyone’s transactions permanently
  3. Secured: a blockchain is secured with an encryption that cannot be hacked

IMPLEMENTING A BLOCKCHAIN

Blockchain is best implemented in a community; the following are communities that it can be implemented upon;

  • A market community: there are lots of market communities around us. As we are tending towards a cashless society, every market community will be receptive of blockchain solution in transacting payments. A market community like Computer Village in Lagos or Mechanic Village in Uyo will definitely benefit from blockchain payment solution than other online payment methods. This is because everyone can access and have records of all transactions in the blockchain.
  • Religious communities: there is a market for blockchain solution in religious organizations. Religious bodies can keep their monies in digital forms by making their members join a blockchain
  • Schools and other educational communities can benefit from blockchain too

 

CONCLUSION

This article is not exhaustive about blockchain technology. Blockchain has the ability to replace or complement traditional banking system and we must be ready for what it has to offer the World

 

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