What is Blockchain? Here’s Everything You Need to Know
By: Darren Lee
Tags: Blockchain, News, Technology, Knowledge, Cryptocurrency

Just like a lot of the technology in the world, the digital assets that have come to light over the past decade like Bitcoin and Ethereum need to rely on some sort of database that’s capable of tracking and maintaining a record of a large volume of transactions in a secure manner. The solution for this need to maintain a large and secure database is the blockchain technology.

Blockchain technology is something that saw its first implementation back in 2009. The technology essentially consists of blocks of data that hold batches of transactions which have been time stamped. Each of the blocks are linked to the previous block and secured through the process of cryptography. This is why it is referred to a chain of blocks.

The world is becoming smarter every day. As it becomes more and more interconnected, the cryptocurrencies are becoming more popular throughout the world. They present a growing market of opportunities that might not want to follow the traditional and long standing banking structure.

Blockchain, however, is more than just a means to power cryptocurrencies. While it is the industry where it saw its invention and where it sees its primary use, it also offers the possibility of creating a fraud-proof system for transactions and exchange. This is why it has a lot of potential to be used outside the world of cryptocurrencies. That is what has also attracted a lot of interest from diverse industries like supply chain management, traditional financial institutions, food production and many more.

How Does Blockchain Technology Work?

Blockchain technology is touted to be a revolutionary new technology. It is a significant innovation that has been compared to be of significance to the invention of the wheel. It is unique and potentially carries a lot of opportunities. In order to understand why it is such an important innovation, it is necessary to understand how it works.

Blockchain technology is so unique because of the fact that each of the blocks of data contains cryptographic hashes of the block before them. This creates an immutable chain of data. The cryptography secures the data. Any kind of attempted tampering with the data is easily detectable and can is simply impossible to go through with.

It is not just that the blocks are all cryptographically linked with each other that make blockchain technology so secure. Another reason why it is so secure is the aspect of decentralization. Each of the computers (or nodes) that have the software installed have a copy of the database which is constantly being updated with the addition of new blocks. There is no such thing as a central storage for all the data. This means each of the new blocks being added to the database are simultaneously being updated throughout the network of computers. Any new records being added to the blockchain have to match the requirements of the chain otherwise it gets rejected by the whole network. It is a truly egalitarian method of database maintenance — the likes of which has never been seen before.

There are other aspects of transaction requirements which define what a valid entry to the blockchain database is. For instance if you look at a Bitcoin transaction, it has to be signed digitally by the party sending the currency units and verified that they have been received by the relieving party. Once the transaction has been verified by the whole network, the Bitcoin transfer is assigned and added to the blockchain record.

Some Of The Most Prominent Blockchain Databases

Over the course of the past few years, blockchain technology has boomed in its popularity. More and more people are realizing the potential uses that it has outside of the cryptocurrency world. There are several industries taking an interest in developing and implementing blockchain technology for their use including financial other technological sectors.

Of course, Bitcoin is the most prominent use case for blockchain technology but there are others making use of or planning to make use of the revolutionary new technology. Arguably one of the most prominent players in the new blockchain technology industry is Hyperledger. It is an open-source collaborative effort created by the Linux Foundation that is operating across several industries. They are making significant headway in popularizing the use of blockchain technology based digital ledger systems. Since the release of Hyperledger back in the middle of July, it has come a very long way with a lot of businesses operating using their platform.

The global technology giant IBM made an announcement in the March of 2017 that they will develop their own blockchain based service which follows the same line of thinking as the Hyperledger made by the Linux Foundation. They will allow their customers to create secure blockchains across several industries and offer the opportunity of interoperability to them.

Then there is the law firm industry which is showing increasing interest in the world of blockchain technology. The reputed ‘big four’ law firms of the world are planning to utilize blockchain technology to change things up in the way databases are maintained in the legal ecosystem. As of now, only Ernst & Young are the only one from the ‘big four’ to actually make their blockchain project public but it is a big move when you look at blockchain technology implementation on a macro scale.

Another big move in the world of blockchain technology was the interest shown by the London stock Exchange. The announcement was made early on in 2018 and they had stated their intent to use blockchain technology to improve on the aspect of transparency for the unlisted businesses when it came to their information about shareholding. This is going to become a game changing scenario if it comes into play for the London Stock Exchange.

How Secure Is Secure?

The simple fact of the matter about blockchain technology is that all the verification and updates of records on the blockchain is done through cryptographic protection. This means that theoretically, the protection that blockchain technology has to offer is much better than what the traditional banking system has been offering. This is a big claim to make but there is plenty of reason to believe that this is the case.

One of the best qualities for security that blockchain technology has is the fact that it is decentralized. This means all the data added to the blockchain cannot be added without verification and there is no possibility of changing records on the blockchain’s ledger retroactively. It is a truly immutable database system and that makes it perfect for storage of important information and transactions in the financial sector.

Of course another benefit that comes from blockchain technology is maintaining the aspect of transparency yet the privacy of the users is never compromised. That has been a problem since cyber criminals have started to use cryptocurrencies for their illegal transactions online but there is significant work being done to discourage such activity. There is a lot more good to be accomplished using blockchain technology and it is the future.