Blockchain: The Never-Ending Story

Blockchain was introduced in 2008 and first implemented a year later as a key component of bitcoin. Its role in cryptocurrency remains its most famous usage, but its reliable, secure data storage capabilities make it appealing in many contexts. The technology has even — quite controversially — been used for absentee voting in elections, with former Democratic party candidate Andrew Yang pushing for it in his campaign. (Experts are less convinced.)

Despite blockchain’s increased presence in the tech world, the concept remains misunderstood. So what exactly is blockchain? Perhaps more importantly, what is it not? And how can an e-commerce brand incorporate it into their strategy? For specific insight for your business, reach out to the technology experts at Katalyst Technologies. For the basics of blockchain, read on.

It IS public

In business bookkeeping, details about assets, income, and debits are kept in a ledger so that finances remain in order. Similarly, blockchain relies on what is considered a public ledger — the complete record of every single transaction and addition to the chain. Each step is permanently available to everyone with access. However, only the relevant data necessary to maintain the chain is visible — contributors remain anonymous.

While private blockchain does exist, it operates under the exact same principles: everyone within the network is still accountable and aware of what goes on in the chain. The sole difference is that users are invited to participate. A private blockchain is generally used internally and requires significantly less computing power.

It is NOT alterable

The first block in each chain is called the genesis block. Its data will be incorporated into the next block and every block thereafter. Because of this, any modification will be immediately and obviously apparent, as the entire chain would be affected. Strictly speaking, a block can be altered, but any change would require the knowledge and approval of the majority of the entire network, as well as the complicated process of remining every subsequent block. Generally, however, blockchain can only be added onto, not amended.

It IS encrypted

While blockchain is a public ledger, users can rest easy that their data remains private. What they input into a particular block goes through an algorithm that encrypts it into a series of numbers and letters that differ from the original data. Once validated, the resulting output exists within the block as something called the hash. Users cannot work backwards to decode the hash and discover the original input.

It is NOT centralized

Even though the genesis block may be the starting point, there is no block in any chain that is more valuable or authoritative than the rest. This makes blockchain much more secure, as a potential hacker lacks a concentrated point of vulnerability to attack. The downside is that this demands much more data storage.

It IS unique

Each block consists of several components, among them a designated time stamp, the transaction details, that block’s individual hash, and the Merkle root — a unique hash of every previous hash in the chain (obtained simply by hashing the most recent block’s hash).

It is NOT completely infallible

As alluded to above, there are ways that members of a network would be able to attack the integrity of a chain; but it would entail close coordination and computing power. It’s called the “51% attack,” and it relies on a majority of the network’s computing power to collectively prevent new blocks from getting confirmed. Even in this case, they would not be able to modify existing blocks without possessing their creators’ digital signatures.

Obviously, the more users there are in a network, the less likely the chances of pulling off a 51% attack.

Blockchain in E-commerce

What happens when a company experiences frequent quality concerns with a specific product? If one unsatisfied customer after another consistently demands a refund, at some point in the supply chain — manufacturing, warehouse storage, distribution, etc. — there must be an issue. If we have the data stored in blockchain, we will be able to detect precisely where the problem occurs and react accordingly.

Blockchain doesn’t need to be strictly tied to mistakes, however. In online shopping, the transaction process entails much more than a customer clicking the purchase button, especially with consumers’ increased expectations.

“From the moment you place an order, you are restless until you get the item in your hand,” says Nixon Xavier, Vice President of Innovation at Katalyst Technologies. Because of this, companies have begun to provide step-by-step updates on an order’s status. Even some pizza chains notify eager diners when their pie is being baked, boxed, and out for delivery. All this information relies on the knowledge that previous steps have been successfully completed.

“Everything is captured, and every moment is important,” says Xavier. “You keep on adding data to your original block and adding more blocks…the chain keeps on extending further and further…it’s a never–ending story.”

It’s time to write your own story and bring blockchain into your business.

Originally published at https://katalysttech.com on March 12, 2020.