Blockchain is perhaps the biggest tech buzzword weaving itself into every sector imaginable.
It all started in 2008 with the launch of Bitcoin, a cryptocurrency that, unlike traditional currencies, is not controlled or issued by a central financial authority (e.g. a bank).
It is basically online virtual cash and every transaction is recorded using blockchain technology, making the bitcoin 100 percent traceable and incorruptible.
But what exactly is blockchain? Blockchain is a digital, distributed and public ledger.
When we think of a ledger, we might conjure images of Ebenezer Scrooge flipping through endless pages of ink-scrawled accounts. Fast forward 200 years and a few industrial revolutions, and while the concept of bookkeeping hasn’t changed, there are two fundamental differences: Transparency and immutability.
It is an A to Z tracker with no loopholes or booby traps along the way. Let’s start by visualizing a blockchain. It is a chain of blocks where each block represents an update.
The chain that connects these blocks makes the data within each block immutable meaning that once a piece of information has been added, it cannot be altered. Ever. Only updated.
This is the beauty of blockchain. Every block has a unique digital signature, so if any data inside a block changes, the signature does too (via a process called hashing).
Like a domino effect, when data changes inside one block, all subsequent blocks are affected and require new signatures. It is a shared database and transaction tracker where everyone involved in a transaction must first approve any changes made.
Take three friends – Max, Rita and Boris. Max lends Rita $100 and this transaction is recorded in a blockchain for all three friends to see. A few months later, Max asks Rita to pay him back claiming she owes him $150.
With the blockchain as a witness, and the approval of Boris and Rita needed to change this amount, it is impossible for Max to defraud Rita of an extra $50.
Can blockchain be hacked? Probably. But it is very, very (very) hard, and requires mammoth computational power, cutting-edge hardware and a lot of time. We might not be able to change anything within a blockchain, but blockchain is changing the world.
Here are just some of the ways how:
Greater transparency in the distribution of charity donations
Less need for middlemen in real estate deals or financial transactions with smart contracts managing the nitty gritty
Royalty tracking and creative asset rights protection for musicians and artists
Seamless sharing of critical patient data in healthcare
Prevention of patient billing fraud and counterfeit pharmaceutical drug distribution
Transforming the logistics and supply chain industry, from the monitoring of refrigerated products to diamond tracking
Blockchain will eventually make the world go round. How is it affecting your world right now?