The blockchain is an undeniably ingenious invention — the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. Since its inception, blockchain has evolved into something greater. The main question every single person is asking is: What is blockchain?
By allowing digital information to be distributed but not copied, blockchain technology makes up the backbone of a new type of internet. Originally devised for the digital currency, Bitcoin, the tech community is now finding other potential uses for the technology.
What is Blockchain Technology?
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
A distributed database
Picture a spreadsheet that is duplicated thousands of times. Then imagine that the network is designed to regularly update this spreadsheet. Information held on a blockchain exists as a shared, and continually reconciled, database. This way of using the network has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Go in deeper with the Google spreadsheet analogy, I would like you to read this piece from a blockchain specialist.
Blockchain as Google Docs
The traditional way of sharing documents, as in the case of banking system, is dependent on others. For example to work with Microsoft word you have to wait until the receiving return copy or make changes because you are locked out of editing. But with Google Docs (or Google Sheets), both parties have access to the same document at the same time.
“Imagine the number of legal documents that should be used that way. Instead of passing them to each other, losing track of versions, and not being in sync with the other version, why can’t *all* business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow. You don’t need a blockchain to share documents, but the shared documents analogy is a powerful one.”
William Mougayar, Venture advisor, 4x entrepreneur, marketer, strategist and blockchain specialist.
Blockchain Durability and robustness
Blockchain technology is like the internet in that it has built-in robustness. By storing blocks of information that are identical across its network, the blockchain cannot:
be controlled by any single entity, and,
has no single point of failure.
The internet itself has proven to be durable for almost 30 years. It’s a track record that bodes well for blockchain technology as it continues to be developed.
“As revolutionary as it sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.”
— Ian Khan, TEDx Speaker | Author | Technology Futurist
Transparent and incorruptible
The blockchain network lives in a state of consensus, one that automatically checks in with itself every ten minutes. A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens in ten-minute intervals. Each group of these transactions is referred to as a “block”. Two important properties result from this:
-Transparency data is embedded within the network as a whole, by definition it is public.
-It cannot be corrupted. Altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network. In theory, this could be possible. In practice, it’s unlikely to happen as taking control of the system to capture Bitcoins, for instance, would also have the effect of destroying their value.
“Blockchain solves the problem of manipulation. When I speak about it in the West, people say they trust Google, Facebook, or their banks. But the rest of the world doesn’t trust organizations and corporations that much — I mean Africa, India, the Eastern Europe, or Russia. It’s not about the places where people are really rich. Blockchain’s opportunities are the highest in the countries that haven’t reached that level yet.” Vitalik Buterin, inventor of Ethereum.
The idea of decentralization
By design, the blockchain is a decentralized technology. Anything that happens on it is a function of the network as a whole. Some important implications stem from this. By creating a new way to verify transactions, aspects of traditional commerce could become unnecessary. Stock market trades become almost simultaneous on the blockchain, for instance — or it could make types of record-keeping, like a land registry, fully public. Decentralization is already a reality.
A global network of computers uses blockchain technology to jointly manage the database that records Bitcoin transactions. That is, Bitcoin is managed by its network, and not any one central authority. Decentralization means the network operates on a user-to-user (or peer-to-peer) basis. The forms of mass collaboration this makes possible are just beginning to be investigated.
“I think decentralized networks will be the next huge wave in technology.”
Melanie Swan, author Blockchain: Blueprint for a New Economy (2015)
Who will use the blockchain?
Currently, finance offers the strongest use cases for the technology. A good example of this is the case of international remittances. The World Bank estimates that over $430 billion US in money transfers were sent in 2015.The blockchain potentially cuts out the middleman for these types of transactions. Online transactions are closely connected to the processes of identity verification. It is easy to imagine that wallet apps will transform in the coming years to include other types of identity management.
“Online identity and reputation will be decentralized. We will own the data that belongs to us.”
William Mougayar, author The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology (2016)
The Blockchain & Enhanced security
Blockchain is a decentralized system. Blockchain security methods use encryption technology. The basis for this are the so-called public and private “keys”. A “public key” is a users’ address on the blockchain. Bitcoins sent across the network get recorded as belonging to that address. The “private key” is like a password that gives its owner access to their Bitcoin or other digital assets. Store your data on blockchain and it is incorruptible. This is true, although protecting your digital assets will also require safeguarding of your private key by printing it out, creating what’s referred to as a paper wallet.
Technology can fundamentally change how we exchange value and perhaps that’s why it has caught everyone’s fancy. Still in its nascent stages, blockchain technology definitely holds vast promise and something to watch for, in the future.
Blockchain Contracts — A New Paradigm
It is opportune to talk about Blockchain Contracts as a human-driven application of blockchains. While the uses of blockchain mentioned above represent a new and trust-based way of doing technological consensus, Blockchain Contracts are a way to create business agreements based on that consensus. An evolution on the common practice of Smart Contracts, Blockchain Contracts allow the contract administrator to intervene and modify a contract if external parameters change. This allows Blockchain Contracts to be deployed to create assets out of social and business endeavours in a way that has never before been possible. This creates a win-win system of incentive design for participants in the Blockchain Contract and can be created by any individual. The ability of an ordinary person to create a potentially world-changing new system of incentive design represents a massive magnification in society’s ability to fund out-of-box ideas enabled by Blockchain Contracts.
Here are a couple links with more information on blockchain Contracts:
Ranchi Mall ICO — All You Need to Know: https://medium.com/ranchimall/ico-all-you-need-to-know-d8e0ca8f334c
Fixing Smart Contracts, Here Come Blockchain Contracts: https://medium.com/ranchimall/fixing-smart-contracts-here-comes-blockchain-contracts-ca0243ef506f
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