Many people perceive the terms Blockchain and Cryptocurrencies as synonymous, when in fact, there is much more to the technology than just a payment system.
You know how in a playground football game each player knows what the score is at any given time, and you can’t change the score without convincing everyone playing that there’s a very good reason for doing so? In a very similar way, each node (player) in a blockchain-based peer-to-peer network has an identical copy of the network’s ledger of events (game score), and that ledger is immutable.
So both playground football and blockchain achieve a situation where you have multiple participants who have agreed upon the historical record of events and that record cannot be tampered with.
In other words:
Blockchain is a software solution (protocol) for reaching agreement (consensus) within a leaderless (decentralized) group of peers (peer-to-peer) that are connected via a specific network (chain). Events within the network are updated as they occur (synchronized), and these events (blocks) are recorded in an indisputable (immutable) historical list (ledger) which each peer has a copy of (distributed).
Blockchain in technical terms
Picture a literal chain of blocks. Now, let’s get a little abstract. Each block is a record (or a collection of data), and they’re all linked together in a peer-to-peer network of “nodes” which are machines connected to the network. The entire network (or machine community) can autonomously verify the integrity and authenticity of a record via self-auditing.
This means that public and verifiable data can be shared across a non-centralized network, transparently, yet securely, protecting the integrity of information or other forms of data as it cannot be corrupted by retroactive alteration. It’s like a write-only database. You can append data to the end, but you can’t go back and edit anything. And, as everyone has a copy, it’s a way of crowdsourcing verification or authentication for things, everyone on the network is witness to it.
At its core, this technology allows for direct trading, with no middlemen (such as banks and organizations) required to guarantee transactions to take place as they should, or other platforms and intermediaries to facilitate trades. These transactions (whether they’re financial, informational, or the transfer of anything else of value) can be automatically verified by the entire network as it is logged in the blockchain with its own unique digital signature.
You don’t have to place trust in the middlemen not to tamper with, delay, or charge you hidden fees for your transactions.
It’s an electronic ledger system that could potentially be industry-transforming, which is why so many people are investing in this technology now despite it still being in its infancy. And not just people, but companies as well. VISA, Mastercard, Kodak, IBM and more are already investing resources in the research and development of blockchain technology.
Blockchain was first conceptualized by Satoshi Nakamoto in 2008, as a core component in Bitcoin, however, the possibilities of such technology are mind-blowing. For example, blockchain technology could allow us to track a food supply chain (or any type of supply chain), granting us immediate status updates and other data including origination, processing, and storage details for food products. Being able to trace each step of the process allows for more accountability in the industry, as well as benefiting from a more efficient system with reduced costs.
Other examples of Blockchain real-world applications
There is no denying that blockchain technology will change the world as we know it. The transparent and automatic nature of it will simplify operations and reduce costs across countless industries. Like the internet in the 1990’s, we have yet to discover all its applications, but here are some examples that we could possibly witness in the near future:
Smart Contracts — Blockchain technology enables the coding of simple contracts that will execute when specific conditions are met without any human intervention.
Governance — Full transparency to elections or any kind of poll taking.
File storage — Distributing data through the network protects files from getting hacked or lost.
Protection of intellectual property — Smart contracts can protect copyright and automate the sale of creative works online, eliminating the risk of file copying and redistribution.
Neighborhood energy microgrids — Blockchain technology enables the buying and selling of the renewable energy generated by neighborhood microgrids.
Identity management — Blockchain technology offers enhanced methods of proving who you are, along with the possibility to digitize personal documents and potentially eradicating identity theft.
Medical records — Any doctor or hospital anywhere in the world connected to the network would have instant access to patient medical records, enabling proper diagnosis and treatments.
Data management — In the future, individuals will have the ability to manage and sell the data their online activity generates.
Real estate — Blockchain technology enables full transparency regarding property titles, transaction log, and historical value.
Is Blockchain safe?
Since Bitcoin’s inception in 2008, there has yet to be a single security issue with blockchain technology. When people hear the headlines of hackers taking advantage of the global phenomenon, the problem lies with human error and businesses who don’t invest in proper cyber-security or cyber-education rather than the blockchain technology itself. Blockchain as a foundational technology is pretty solid, as there is no central point in which hackers and crackers can exploit a vulnerability. Everything is encrypted, and everything is shared, so users benefit from security and anonymity while also knowing that their data is safe and can’t be lost.
The bottom line that makes blockchain technology incredibly safe is based on its transparent and incorruptible nature. Data embedded within the network as a whole, by definition is public. Incorruptible since altering any unit of information would mean using a massive amount of computer power to override the entire network which is practically impossible.
We are witnessing a complete paradigm shift in regards to conventional wisdom. Life as we know it is changing and the world is taking notice. From post offices, corporations, financial institutions, all the way to governments around the world are developing projects to implement blockchain technology in their operations. The application possibilities of such revolutionary technological innovation are endless and beyond the imagination. The examples mentioned above are just the tip of the iceberg. Life is about to become a lot easier, safer, and fairer for everyone. Considering the political, economic, and social climate in today’s world, a radical change is past overdue, and blockchain technology will help facilitate it. Brighter days are on the horizon! How exciting is that?
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