In our first talk, we discussed about blockchain, cryptocurrencies and career perspectives. We usually get a lot of questions concerning career paths and perspectives which apply to the blockchain sector. In this post, we will provide a very basic explanation of Blockchain, Cryptocurrencies and related concepts, along with an career insight in the blockchain technology.
What is Blockchain?
In its most basic form, Blockchain is a new technology. Its effects are not so different from the introduction of smartphones in modern life. It is changing things; it is changing how things work; it is changing how the society works.
Let’s take a simple example: consider your money. It can be in many forms but you use it to buy food, clothes, houses, for transport, and even for bribing. Regulations around money are probably the most restrictive. If you want proof, try to print your own money one day. You will probably end in jail the same afternoon. Now, imagine that you could have a technology that is above the regulations and can’t be controlled or shut down by anyone. In a nutshell, there is no one to jail. This is what Bitcoin and other cryptocurrencies are achieving.
When we talk about blockchain, we are are talking about Decentralization. So what is Decentralization?
The way our society works
Let’s see how our society currently works. In Mauritius, you have a certain group of people who control the whole Mauritian population and they hold all the power for at least 5 years. That’s called centralization of power.
Facebook is another example where you store all your data, including messages, images and photos. Imagine Facebook losing all your information today, including your chat history, your photos, videos and posts. The immediate feeling would be of helplessness because of the fact that you are powerless when you really need to control your data. This is called centralization of information.
Blockchain solves this problem at its core. The Blockchain technology allows people to create ecosystems where this is no single point of control or single point of failure. A specific group of people cannot decide for everyone and your information is not centralized in a single system.
Bitcoin is just the start - there’s so much more that is happening and that is going to happen.
Difference between Blockchain and Cryptocurrency
A question that we, at Horizon Africa, get very often is about the difference between blockchain and cryptocurrency?
A simple answer would be that a blockchain is the underlying structure and cryptocurrency is just an application which works on top of a blockchain. This is an oversimplication of how things really work but provides a general idea of these two very important concepts work together.
Types of Blockchains
There are different types of blockchains and their core differences are based on their uses. For instance, Bitcoin is a very stable and secure blockchain with a specific purpose; that of acting as a payment system and alternative currency. Its scope is quite limited but it fulfills its purpose very well and very reliably.
Then we have general purpose blockchains like Ethereum which gives you the ability to create your own blockchain applications which are usually known as Dapps or Decentralized Applications. It basically means that you can create your own decentralized application on top of an existing blockchain and leverage the power of decentralization for your own use cases.
A very important part of a blockchain system is its consensus algorithm. Consensus algorithms are rules that define the blockchain and they determine how decentralized a blockchain is. It is important to understand that blockchains can have different levels of decentralization based on its idealogy, its technical structure and its use cases.
A consensus algorithm determines how you can participate in a blockchain. For instance, for Bitcoin, you just need a computer and an internet connection and you can start participating in the blockchain as a normal user or even as a miner. Bitcoin and Ethereum use a concensus algorithm called Proof of Work. Other popular consensus algorithms include Proof of Stake, Delegated Proof of Stake, and Proof of Authority.
Blockchain engineers are currently the highest paid engineers in the world. The primary reason behind this startling statistic is the fact that the blockchain sector is booming and there is a dire lack of qualified technical people working in this field.
Being an entrepreneur in the blockchain technology currently allows you to set up your business in a very niche and highly sought after sector. Even after the end of ICO boom, many blockchain startups are currently getting funded to further develop their ideas.
The blockchain technology also allows you to leverage one of the most ground-breaking technologies. The number of applications of the blockchain technology are huge; accounting, social networks, identity management, etc.