What exactly is Blockchain technology?
30th Apr 2018
Choosing the subject of Blockchain for this blog entry is as much for my benefit as it is for you. I have seen quite a buzz online recently regarding Blockchain technology, but I wasn’t 100% sure what it is or how significant it is to the IT sector and the job market. I suspect for most people that are reading this, are in a similar boat and maybe just think that it is the latest buzzword or more IT jargon that isn’t relevant. In truth, Blockchain is a breakthrough technology that will affect nearly every industry for years to come. So, what is it?
According to InsiderPro, Blockchain is a distributed database existing on multiple computers at the same time. It is constantly growing as new sets of recordings, or ‘blocks’, which are linked and secured using cryptography. Each block contains a timestamp and a link to the previous block, so they form a chain.
The database is not managed by any particular body; instead, everyone in the network gets a copy of the whole database. Old blocks are preserved forever, and new blocks are added to the ledger irreversibly, making it impossible to manipulate by faking documents, transactions and other information. It is pretty much an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.
The idea itself is actually nothing new. In fact, it was originally outlined in a 1976 research paper New Directions in Cryptography, but it was regarded as complicated and not safe. It wasn’t until 2008 that the concept was put into reality by Satoshi Nakamoto for use in the cryptocurrency Bitcoin, as its public transaction ledger. To complicate things further, Satoshi Nakamoto could be an alias or even a group of people, but I digress.
Traditionally, trusted third parties (like a bank) at as intermediaries for financial transactions. For example, if you are on holiday and you pay for something using a debit card, this transaction will pass through a local bank and it can take up to 3 days for your account to be updated. The bank will take a commission for doing this either in the form of exchange rate conversion or other charges.
Blockchain technology is open-source technology which offers an alternative to using a bank or another intermediary for money transfers of the crypto-currency Bitcoin. The bank is replaced by the collective verification of the ecosystem offering a huge degree of traceability, security and speed.
However, Blockchain technology is not just used in Finance. It can be applied to any multi-step transaction where traceability and visibility are required. It has been used recently to help prevent voter fraud. A big subject in the last election held in America. Blockchain technology can provide an electronic vote-counting system which cannot be hacked. In the same way, blockchain acts as a public ledger for cryptocurrencies, it can also create a permanent and public ledger for votes as tallied—promising a future of equitable democratic elections around the world.
I hope this blog helped in a small way to get your head around Blockchain Technology. I still have plenty of questions and I will be keen to hear from software developers or database specialists on their thoughts on the technology and its many applications in real life. Get in touch with me (Gareth) on email@example.com or connect with me on Linkedin here
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