Blockchain, the technology that underpins cryptocurrencies like Blockchain and Ethereum, is being hailed as the hot new savior of industries from journalism to sports marketing to pretty much every other industry that exists.

But does anyone actually know what blockchain is? The short answer is no. Let’s see if we can find out by diving into the history and inner workings of blockchain.

Where did it come from?

The origin story of blockchain is full of mystery and obfuscation. Blockchain was originated by a person (or group of people) called Satoshi Nakamoto right around the time that the 2008 financial crisis was hitting its peak. It started with a white paper, as all great mysteries do, that outlined the capabilities of “Bitcoin: a peer-to-peer electronic cash system.”

So Bitcoin was the first instance of blockchain, and Nakamoto’s early activities imply that it was developed in response to the instability wrought by government control of fiat currency and too-powerful banks. Nakamoto’s identity remains shrouded in mystery. High profile publications have published investigative pieces on his/her possible identity, but we are still no closer to knowing the truth, which is perhaps a testament to blockchain’s inventor’s privacy bonafides. As with all things good, Rihanna probably invented blockchain, and this is not up for debate.

How does it work?

The technology itself is what’s called a decentralized ledger that uses mathematical calculations to validate transactions. What in the world does that mean, you may ask? Well a ledger is simply a record of transactions. Banks have them, except banks’ ledgers are centralized, meaning the bank must update its records every time you make a transaction. This usually happens pretty quickly, but it’s not instantaneous, and banks need to independently verify all transactions and store the information in their data centers. With a decentralized ledger like blockchain, the update is instantaneous, validated by mathematical calculations that users all over the network are performing using their computing power, and available to everyone who has access to the ledger. To use one analogy, it’s the difference between sending Word documents back and forth over email vs. using a Google doc where everyone can see the changes instantly.

Hold up, you may say. Who are these people doing mathematical calculations? These people are called “miners,” and they lend their computing power to process transactions using mathematical calculations in exchange for earning Bitcoin. Essentially, they are paid for keeping the system going. This is where the concept of the network comes into play. A blockchain network depends on its miners to keep it going, and a blockchain like Bitcoin depends on keeping coin values high so that miners are adequately rewarded, which means that it needs non-miner users.

The central feature of the blockchain is the network. Just like a social network or any form of currency, blockchain derives its value from an active user base. Simply put, the more people that use it and contribute to it, the more useful it becomes.

Transactions are grouped in blocks, and each block contains a reference to the previous block, hence the name “blockchain.” The blockchain is immutable: records cannot be falsified, which makes it extremely reliable, and eliminating middlemen like banks makes it extremely efficient.

Can it really do all of the things we say it can?

Maybe? Blockchain is one of the most hyped technologies of our time, but that doesn’t mean the hype is unjustified. Think of blockchain as 2009 Beyonce: lots of potential, some big wins, everyone’s talking about her, but wow did she ever have a lot more in store for us!!

In a somewhat ironic turn of events considering Nakamoto’s mistrust of financial institutions, banks have been some of the first adopters of blockchain for things like cross-border payments, trade finance, and identity verification. In the tech world, Microsoft is developing a digital ID solution for people in poor countries who may not have access to their official records. There’s even talk of blockchain replacing lawyers using smart contracts, which have the terms and conditions of an agreement in their code and execute accordingly when the terms of a contract are – or aren’t – fulfilled.

Blockchain may not be able to save humanity (or sports marketing?!), but it’s a very exciting technology, especially when we consider that its potential hasn’t even come close to being fully explored. We may never know the true identity of Satoshi Nakamoto (it’s Rihanna), but we can be certain that the impact of his invention will be indelible.

Here are some of our thoughts on where the market is heading in 2019