The blockchain is a concept first pioneered by BitCoin. The Bitcoin Blockchain is a ledger of all existing BitCoin transactions. Think of it as a giant database for every use of BitCoin ever. It uses decentralized technology to verify every transaction to prevent fraud and a failure of the system by compromising any single node.

In the same way that Torrents utilize multiple computers to distribute content, BitCoin uses the blockchain to verify all data in the network. Users on the system have digital wallets in which they can store digital currency.

If you compare BitCoin to something like the US Dollar a clear difference emerges. Every year more and more dollars are printed resulting in inflation. Every year the dollar buys less than it did the year before. BitCoin differs from most traditional currency by installing a cap on the total number of BitCoins that can be in circulation. This has generally caused the value of BitCoin to increase.

Warning: BitCoin prices have fluctuated wildly over the past several years. Do not invest without doing due diligence into the size of these shifts and their causes.

BitCoin was the first mover in the space but it’s current limitations spawned several competitors that seek to fill the holes BitCoin does not. Enter Ethereum.