Blockchain Technology Explained
Blockchain is a Distributed Ledger Technology (DLT) that was invented to support the Bitcoin cryptocurrency. Bitcoin was motivated by an extreme rejection of government-guaranteed money and bank-controlled payments. The developer of Bitcoin, Satoshi Nakamoto envisioned people spending money without friction, intermediaries, regulation or the need to know or trust other parties.
Many people think of blockchain as the technology that powers Bitcoin, while this was its original purpose blockchain is capable of so much more despite the sound of the word there’s not just one blockchain. Blockchain is shorthand for a whole suite of distributed ledger technologies that can be programmed to record and track anything of value from financial transactions to medical records or even land titles. Now, the question is that we already have processes in place to track data then what’s so special about blockchain?
Let’s break down the reasons why blockchain technology stands to revolutionize the way we interact with each other.
1. New Way to Track Data and Store Information.
Blockchain stores information in batches called blocks that are linked together in a chronological fashion to form a continuous line metaphorically a chain of blocks if you make a change to the information recorded in a particular block you don’t rewrite it instead the change is stored in a new block showing that X changed to Y at a particular date and time, sound familiar that’s because blockchain is based on the centuries-old method of the general financial ledger. it’s a non-destructive way to track data changes over time. Unlike the age-old ledger method, originally a book then a database files stored on a single system blockchain was designed to be decentralized and distributed across a large network of computers this decentralizing of information reduces the ability for Data Tampering.
2. Creates trust in the Data
Blockchain creates trust in the data that makes it Unique. Before a block can be added to the chain, a few things must happen. A cryptographic puzzle must be solved, thus creating the block. The computer that solves the puzzle shares the solution to all the other computers on the network this is called proof of work. The network will then verify this proof of work and if correct the block will be added to the chain. The combination of these complex math puzzles and verification by many computers ensures that we can trust each and every block on the chain because the network does the trust-building for us. We now have the opportunity to interact directly with our data in real-time.
3. No Need for Intermediaries
Currently, when doing business with one another, we don’t show the other person our financial or business records. Instead, we rely on trusted intermediaries such as a bank, or lawyer to view our records and keep that information confidential. These intermediaries build trust between the parties and are able to verify. This approach limits exposure and risk but also adds another step to the exchange which means more time and money.
Know More: Bitcoin Synergy
If Information was stored in a blockchain then there is no need for the middleman, lawyer, banks, etc. A middleman who would ordinarily confirm information with other parties. As we now know all blocks added to the chain have been verified to be true and can’t be tampered with. So, the owner can simply show information secured on the blockchain and would save considerable time and money by cutting out the middleman. This type of trusted peer-to-peer interaction with our data can revolutionize the way we access verify and transact with one another.
Possible ways to Implement Blockchain technology
Blockchain is a type of technology and not a single network, it can be implemented in many different ways. Some Blockchains can be completely public and open to everyone to view and access. Others can be closed to a select group of authorized users such as your company, a group of banks, or government agencies. And there are hybrid public-private blockchains too. In some, those with private access can see all the data, while the public can see only selections. In others, everyone can see all the data, but only some people have access to add new data.
Blockchain Technology is a combination of all these factors decentralizing the data, building trust in the data, and allowing us to interact directly with one another. Blockchain technology has the potential to underpin many of the ways we interact with one another. But, much like the rise of the Internet this technology will bring with it all kinds of complex policy questions around governance, international law, security, and economics.
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