The Basics of Blockchain Technology

Blockchain began with the advent of the Bitcoin global internet currency in 2009 with blockchain being its underlying technology. However, as we will see, blockchain technology can be used for other purposes. Blockchain, as suggested by some, is really going to take the world as-we-know-it by storm.

Is it “a blockchain” or “the blockchain?”

When you hear people say “the blockchain” as opposed to “a blockchain,” they are typically speaking of bitcoin’s blockchain. “A blockchain” can refer to bitcoin’s blockchain as well as other blockchains.

What is it?

A blockchain is basically a long string of “blocks.” A block, in the context of a blockchain, is a small snippet of information that was created by a user and added to a growing data chain. The information is time-stamped and considered current as it sits as the newest block on a chain containing other blocks of subsequent information. The current block directly connects to the block that came before it, which, in turn, is connected to the block that came before that back to the beginning – the “genesis” block.

Having a Growing History of Events Creates Trust

We have, in effect, a long string of events. All data added to the blockchain infers the entire network’s past and becomes part of its irrefutable chain. Additional information can be included with the creation of new blocks in the chain. This data is added to the honest chain which grows in length and therefore trusts every day. We can infer that the most recent, proven block contains the most accurate and current information.

Bitcoin is the Blockchain’s the Longest Chain

The longest blockchain is bitcoin. The longest chain is the most trusted chain. New chains may be created but will not surpass bitcoin’s length unless a new chain emerges that most of the network concedes to use and for some time. The longer the chain gets, the harder it will be for a hacker or attacker to misrepresent data as all users have access to the full event-chain.

This is not to say that blockchain does not have uses outside of currency; it certainly does. However, from a semantics point-of-view, this digital currency application is currently using the longest existing blockchain. Other technologies may eventually cause the name and application of this paradigm to change, but its use will be similar.

Blockchain’s Other Uses

Any individual or entity can create their own unique chain using this protocol at any given time. Some have called these “forks.” Anyone can create a new chain of verifiable information at any given time. This new chain, which can go by any name, will grow longer as it grows in trust. The burden of proving the new chain’s advantages over a previously used chain falls on the creator of the new chain. Why? Because users are already using the longest and most trusted chain, why would they want to switch to yours? This is something unique that will play out in interesting ways in the coming years as everyone is scrambling to come up with practical applications for this technology.

If voting moves over to a blockchain, we will simply have more honest elections. Governments are putting their public records on blockchains as a way of increasing transparency. Blockchain can be used by those wanting to prove their identity or work by referencing data on the chain. Property owners can place their own documents in a blockchain.

Any data placed on a blockchain is subject to scrutiny by the rest of the network. This is why verified data on a blockchain is simply more valuable than sitting on a piece of paper in a desk or on a centralized server.

A Bright Future

A world that makes use of blockchain will be a world where individuals trust each other more. Honesty will no longer be optional, it will be required. However, the most beautiful thing about blockchains and other decentralized networks is that they are not cruel but simply fair. All information is always taken into account and a majority must reach true consensus if data is to be modified. A more fair world is potentially a more prosperous one with those that at one time didn’t have access to these resources. Because blockchain is built on a model of trust and consensus, joiners are jumping in a flowing river. The river will guide them and not force them.

Blockchain Technology Will Shape The Next Few Years

Blockchain technology continues to evolve.

• Blockchain technology started to gain momentum by allowing digital information to be distributed without being copied.
• Blockchain is a collection of data that is run by computers without any singular ownership.
• Blockchain is democratized. The info is available for everyone to access.

Because everything is so public, hackers will have a hard time corrupting the data.

Core Values Of Blockchain Technology

Transparency

A person’s personal information is hidden through cryptography. The only thing visible is their public address. Anyone can view the transactions completed through their public address. This adds a new layer of transparency and accountability.

Decentralization

Analysts note that everything was centralized before the creation of bitcoin. However, centralized systems are vulnerable because all of the information is located in a single spot. That makes it easy for hackers to corrupt the data. Also, a system upgrade for a centralized system could damage everything. However, blockchain technology is decentralized, which gives people full control over their information.

Dependability

Once information enters the system, no one can mess with it. Dependability is a major asset for banks. Using the bitcoin system, all transactions are considered input and as such, they go through a hashing algorithm. The hash faction simplifies the amount of information that a person has to keep track of.

The Future Of Blockchain

Smart Contracts

Ethereum is a blockchain project that has the potential to code simple contracts. In the near future, smart contracts are projected to perform simple functions that will enhance the finance industry.

Supply Chain

Many people are concerned abut the transparency of companies and their supply chain. In the future, companies will use blockchain time-stamping of allocation to inform their customers that their products are genuine. Blockchain may be used to help perform supply chain audits for consumer goods.

The Internet Of Things

The Internet of Things describes electronic devices that are controlled through a network. Smart contracts enable remote systems to function properly. IoT involves different software sensors and mechanisms. IoT has improved the efficiency of many devices. In the future, IoT apps will impact data analytics.

Preventing Identity Theft

There are serious security risks involving online transactions. Blockchain technology offers sophisticated methods for preventing identity theft. Once a person verifies their identity, they will be able to digitize their personal documents.