What is Blockchain?
For those of you who may not be up to speed on the latest technological advances, blockchain is linked to the cryptocurrency, Bitcoin, currently taking the world by storm. Blockchain was created by Satoshi Nakamoto back in 2008 and serves as a public ledger to detail all Bitcoin transactions – in other words, it’s a record keeping tool. Originally, it was solely used for Bitcoin purposes, but internet users are finding new ways to use this technology for other reasons as well. It records Bitcoin, but if programmed correctly, it can record almost anything, not just monetary transactions.
- Digital ledger of Bitcoin transactions
- Not controlled by any one person
- Tamper proof
- High levels of encryption resulting in high security
How Does it Work?
Blockchain is a digital ledger, much like a spreadsheet except that this one is accessible from anywhere and updates itself. This database is a shared source and is not stored in a single location — they’re hosted by millions of users at the same time — which is a definite plus point in its favour. This means that all records it keeps are completely transparent and can be verified at the click of a few buttons. Since there is no central version of this information, there’s also nothing for a hacker to attack and corrupt so it is one of the securest data keeping methods out there.
All the blocks of information that it records are stored in identical form across the entire network. This means that no single person can control any of the information and it also doesn’t have a single point where anything can fail. This robustness has been proved by the fact that since its inception, there has been no major disruption to the way it has operated – any issues have been caused by human interference. The durability of this technology is also evident in that the internet itself has been successful for the better part of 30 years. With the continued development of blockchain it’s likely it will see the same success.
Transparency is Key
Blockchain adds to its high security levels by actually checking itself every ten minutes. This is a sort of self-auditing programme that ensures everything is running smoothly and that transactions are recorded accurately. These transactions are referred to as blocks and are part of the way the programme runs so well. The best part about this is that any of the blocks added to the chain cannot be corrupted. If a person were to try altering any of the information on the chain, they would require extremely high levels of computing power in order to override the entire blockchain network, something that’s virtually impossible.
Blockchain is made up of nodes, which are individual computers connected to the chain. They validate and pass on records of transactions whilst also getting a copy of the blockchain – this happens automatically once a node joins the network. This means a second, highly powerful network is created. Whilst each node that joins is now essentially an administrator in this decentralised network, each has an incentive in that they can win Bitcoins. This is commonly referred to as mining, but rather than actually digging, nodes solve computer puzzles to retrieve the coins – this was the original reason that blockchain was created.
Conclusion
For the most part, users don’t know enough about blockchain for it to be useful to them. Many sites and companies are already utilising this type of shared network or peer to peer technology without anyone even really noticing it. As we mentioned earlier, blockchain has the potential to be applied to multiple different business models, enhancing them and providing greater security for all involved. Sharing economy, crowdfunding and decentralised file storage, all offer clear benefits in terms of stopping data from getting hacked or even simply lost. Protecting intellectual property and managing identities would also benefit from using blockchain technology, which would result in a safer internet all round.