Blockchain Explained: A Beginner’s Guide to Understanding this New Technology.
Blockchain technology is a bit of a mystery to some, but it’s an exciting new way of doing things. The potential for this revolutionary technology is being felt in a number of industries, from finance and healthcare to logistics and government. Blockchain is a system that records data as a series of blocks. Each block contains information about transactions that have taken place. So, what does blockchain mean exactly?
What is Blockchain?
Blockchain is a distributed ledger. It’s a digital record of data, such as transactions. Each piece is stored as a block in the chain.
For example, when you make a transaction on the blockchain it will be recorded within the next block of the chain. Every time someone records data on the blockchain, this information is updated across the network and distributed to every computer with access. The result of this series of blocks is an unchangeable blockchain which can’t be corrupted by anyone, because all changes require agreement of the rest of the network.
Most importantly, blockchain’s security means that once data has been added to the chain it cannot be modified or deleted.
How does blockchain work?
Blockchain is a system of blocks. Blocks are added to the chain in chronological order, and each block contains information about transactions that have taken place. Every time someone makes a transaction, that information is added to the next block. Once that block is full, it is appended to the existing chain, and the next block begins.
Exactly how appending blocks to the chain works is rather technical cryptography, which we won’t discuss here. The important part is, the entire network is able to agree on what the next block is, and after they do, that block can never be changed. That agreement takes time, and is why transactions don’t complete instantaneously. This agreement is also what enables people to track transactions without third-party intervention or a central authority controlling all of the activity.
What are some of the benefits of blockchain technology?
The benefits from blockchain technology are still being discovered. That’s what makes this technology so exciting! At present, much of the promise of blockchain stems from its secure and immutable public ledger — everything is recorded permanently and cannot be altered or deleted. This means that all transactions are safe from outside interference or manipulation, but not from outside observation.
Despite its transparency, blockchain also has privacy benefits. With traditional systems, personal information can be breached without immediate detection. With blockchain, on the other hand, personal data is not directly linked to the transaction.
Blockchain also allows new applications like multi-party (multi-sig) transactions, where multiple people must agree to contribute to a purchase in order for it to be executed. This can be done without a mediating third party, increasing the security of the group’s funds, and limiting loss due to fees for such mediation.
Future use cases of Blockchain
Blockchain technology has the potential to change the way we interact with information online. The possibilities for blockchain are still being discovered, but below are some of the most popular applications that could be used in the coming years:
• Content management — As Internet users, we’re all well acquainted with someone else’s idea being mistakenly attributed to us — whether it’s an article you shared on social media or a photo you uploaded without attribution. Blockchain can help solve this problem by providing content creators with a digital signature and timestamp for any piece of content they create.
• Voting — Blockchain technology can also be used in democracy-based voting systems to regulate who is eligible to vote and how their vote is counted. Information about voting would be securely stored on the blockchain so that it couldn’t be tampered with after the fact.
• Finance — It’s difficult to keep track of money when it goes through too many hands. However, the blockchain has an immutable record of all transactions that can be much more easily followed than would be possible with traditional banking.
• Art — A major problem in the art worlds is who owns a piece. With blockchain, transactions can be recorded, so physical possession need not be the only criteria for ownership.
Conclusion
At its simplest, blockchain is a distributed, decentralized digital ledger.
Some benefits of blockchain technology are the ease of data management, data security, and data sharing.
There are many use cases for blockchain technology, but it is still in its infancy and it’s difficult to tell what the future will hold. One thing is certain though, blockchain’s greatest potential is still being discovered.
