What Is Blockchain: A basic explanation.
It is evident that the internet has transformed many aspects of our lives. From the way we do business to the way we connect to the rest of the world. In the 1990s, during the rising of the internet age, few would have guessed the tremendous effects the internet would have in our world.
Originally, the internet did not need a foundation of security. All it was used for was to transmit emails, run discussion and news forums, and display webpages etc – Security was not a priority. Fast forward 10 years later and beyond, the internet is used for online transactions, banking, and entertainment and so on. Passwords, credit card numbers, security codes and sensitive information have flooded the internet.
We have reached a point where security on the Net is crucially needed. To make matters worse. Massive amounts of data and personal information about its users are collected by Companies such as Amazon, Apple Inc., Facebook and Alphabet – consider the fact that the concentration of this “Big Data” is centralized within few large companies such as these. This is disadvantageous because not only do these companies “own” our data, this also means that there is a single-point of failure that can be attacked. News about data breaches is not uncommon (That’s just a fraction of what’s really happening. Companies prefer keeping it to themselves).
Enter Blockchain
With the creation of Bitcoin in 2008, the world was introduced to a concept that is likely to revolutionize and impact various industries such as but not limited to finance, government, medical and media. A concept that I believe will also lead toward a new internet architecture.
blockchain is not just any new technology. It is a type of technology that will challenge other existing technology. This technology has been called the greatest innovation since the internet and it has the potential to literally impact the lives of almost everyone within few decades.
In this article, we’ll try to gain a basic non-technical understanding of what blockchain is and we’ll also cover some of its uses in the real world.
I hope you’ll find this article educational and insightful in your understanding. I believe that the more people understand blockchain technology, the greater the impact it will have.
Let’s cut to the chase. What is blockchain?
Blockchain in its basic form is a database – an accounting ledger in which you put records, in this case an append-only database of a growing list of ordered records called “blocks”. (Sounds bland, I know).
Before you run away. It’s very unfortunate that this definition doesn’t do justice. If you don’t know so much about blockchain, you’re probably thinking “Is that IT? All that hype for a database?” Mark Gates says it well in his book, “…calling blockchain a new type of database is like saying email is a new way of sending people letters…that definition doesn’t explain the true genius behind how the blockchain stores records of value and transactions.”.
So what’s special about this particular database?
This database is distributed and hosted across many computers – there are no central server running this database, no single person has control over it and the records in this database cannot be changed or removed. What we have is a distributed, decentralized, immutable database that has a mechanism that is consensus-driven; all participants/blocks in this peer-to-peer network must validate any transaction and hence the nature of blockchain is very secure. Any attempt to tamper data will create a need to change data present on all computers (blocks) within the network, and any violation will make the tampering invalid. Bitcoin is just one example of what blockchain can do – a decentralized and secured global digital currency – no government, authority or institution (a bank for example) controls it.
Few examples on how blockchain can be applied it in the real world
IOT (Internet of Things)
IOT is the interconnection via the Internet of computing devices embedded in everyday objects, enabling them to send and receive data. At this point, the idea of making the Internet of Things and blockchain work together may seem a bit mind-boggling, considering that blockchain technology is not that well-known and exploited by specialists. But this ranks high on the to-do list of what many experts plan to do, as they research ways to make the two emerging technology work together.
Currently, an internet collecting data from all our devices is bound to cause some security problems. Blockchain will add a layer of security to this technology (underpinned by some of the most robust encryption standards available) which will make it nearly impossible for any attackers to bypass it. In addition, due to the fact that blockchain is decentralized, there is no single-point failure in this network.
Smart Contract
Smart contracts are essentially programmed contracts that are stored on all computers in a blockchain network. It defines a set of conditions to which all parties using the contract mutually agrees on. It is based on “if this happens, then do that”. Once the required condition are met, certain actions are executed automatically without any human intervention or third parties. This saves both time and money.
There are multiple ways in which Smart contracts can be used. For example, the insurance industry. In case of insurance claims, all contracts(claims) can be recorded on a blockchain, thus eliminating multiple claims being registered by one user. Concurrently, the user is also not scammed out of a claim by the company stating that they have already issued a payout.
Copyright and royalty protection
In a world with growing internet access, copyright and ownership laws on music and other content has become very tricky. With blockchain, those copyright laws would improve considerably for digital content downloads, ensuring the artist or creator of the content being purchased gets their fair share. The blockchain would also provide real-time and transparent royalty distribution data to musicians and content creators.
The Future
When it’s all said and done, blockchain is a truly amazing piece of technology that can be used in practically every field and industry. There’s no doubt that this technology will produce significant changes, but like any other emerging technology, it comes with many limitations, at least currently. This has raised many sceptics. But there’s room for improvement and it will happen in a gradual manner because we need time to test the new ideas, digest information, see how we can improve them and adapt to the new changes. Failure will take place in the process but this doesn’t mean blockchain technology will die out. Learning from previous actions and taking failures as valuable lessons will certainly lead to much better ideas and plans.
Facebook Comments