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Blockchain isn’t a household buzzword, like the cloud or the Internet of Things. It’s not an in-your-face innovation you can see and touch as easily as a smartphone or a package from Amazon. But in a world where anyone can edit a Wikipedia entry, blockchain is the answer to a question we’ve been asking since the dawn of the internet age: How can we collectively trust what happens online?
Every year we run more of our lives—more core functions of our governments, economies, and societies—on the internet. We do our banking online. We shop online. We log into apps and services that make up our digital selves and send information back and forth. Think of blockchain as a historical fabric underneath recording everything that happens—every digital transaction; exchange of value, goods and services; or private data—exactly as it occurs. Then the chain stitches that data into encrypted blocks that can never be modified and scatters the pieces across a worldwide network of distributed computers or “nodes.”
Think about a blockchain as a distributed database that maintains a shared list of records. These records are called blocks, and each encrypted block of code contains the history of every block that came before it with timestamped transaction data down to the second. In effect, you know, chaining those blocks together. Hence blockchain.
A blockchain is made up of two primary components: a decentralized network facilitating and verifying transactions, and the immutable ledger that network maintains. Everyone in the network can see this shared transaction ledger, but there is no single point of failure from which records or digital assets can be hacked or corrupted. Because of that decentralized trust, there’s also no one organization controlling that data, be it a big bank or a tech giant like Facebook or Google. No third-parties serving as the gatekeepers of the internet. The power of blockchain’s distributed ledger technology has applications across every kind of digital record and transaction, and we’re already beginning to see major industries leaning into the shift.
First up are the big banks and tech giants. Big business will always drive innovation, and the rise of blockchain-based smart contracts (read on for a deeper explanation) turns blockchain into a middleman to execute all manner of complex business deals, legal agreements, and automated exchanges of data. Companies such as Microsoft and IBM are using their cloud infrastructure to build custom blockchains for customers and experiment with their own use cases, like building a worldwide food safety network of manufacturers and retailers. On the academic side, researchers are exploring blockchain applications for projects ranging from digital identity to medical and insurance records.
At the same time, dozens of startups are using the technology for everything from global payments to music sharing, from tracking diamond sales to the legal marijuana industry. That’s why blockchain’s potential is so vast: When it comes to digital assets and transactions, you can put absolutely anything on a blockchain. A host of economic, legal, regulatory, and technological hurdles must be scaled before we see widespread adoption of blockchain technology, but first movers are making incredible strides. Within the next handful of years, large swaths of your digital life may begin to run atop a blockchain foundation—and you may not even realize it.
Blockchain for Beginners
People often get bogged down in technological complexity when trying to understand blockchain, but the basic concept is a simple and universal one. We have facts and information we don’t want accessed, copied, or tampered with, but on the internet, there’s always a chance it could be hacked or modified. Blockchain gives us a constant—a bedrock we know won’t change once we put something on it and where a transaction will be verified only if it follows the rules. A “trustless system” doesn’t mean it’s a system you can’t trust. Quite the opposite. Because the blockchain verifies each transaction through PoW, this means no trust is required between participants in a transaction.
*This article is presented by: Swiftnlift Business Magazine