You’ve heard of blockchain. You have discussed it with your friends or colleagues, but those discussions typically lack depth and the conversation fizzles. Sound familiar? While most are aware that blockchain exists, many don’t really have a full understanding of what it is and how it can revolutionize security and governance across nearly every industry. So, what is blockchain?
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. More directly, it is a system that records data in such a way that it makes it difficult or impossible to change or hack that system.
Bitcoin and Blockchain
The technology we refer to as blockchain was first introduced in 1991 by Stuart Haber and W. Scott Stornetta as a way to reduce tampering with the timestamp on documents. However, blockchain didn’t truly find its footing until January 2009 with the rise of Bitcoin.
Bitcoin, the world’s first cryptocurrency, was created by a person or group of people under the pseudonym, Satoshi Nakamoto. Bitcoin built-in blockchain as part of its security and governance protocols. Satoshi saw it as a new electronic cash system that could be governed by the masses- not trusted third parties like banks. Since then, Bitcoin has started a cryptocurrency revolution, putting blockchain technology as a centerpiece for more than just financial transactions.
But, what makes blockchain so secure and unhackable?
Going Deeper into the Blockchain Process
A blockchain is exactly what it sounds like- a chain of digital blocks strung together that store information. The key to its success, however, is in a simple, but effective way of managing adjustments to the chain. It all starts with the genesis block, or the first block of the chain. This will typically hold an original data point or transaction that you want protected.
Each block has three important elements:
- Data: It could be healthcare information, records of a financial transaction or any number of other items. The point is that it’s data that you don’t want to be tampered with or hacked.
- Hash: The hash is an alphanumeric code that acts as an identifier of the block.
- Hash of the previous block: When someone makes even the slightest alteration to a block, a new block is created with that change as the next block in the chain. That block will that the altered data, its own hash AND the hash of the previous block in the chain.
A Brief Example of Blockchain Security
This simple ledger system makes it very difficult to alter any original data. Let’s say that we have a 10 block blockchain. If someone tampers with block number 2, a new block will be formed with a new hash and will still hold the hash of the first block in the chain.
However, block 3 in the original chain is no longer in sync. Blockchain relies on every block being in sequential order having its own hash and the hash of the previous block. Now that block 2’s hash has been changed, it no longer fits in the original blockchain.
The tampered block 2 is now the start of a new chain that is no longer recognized by the initial chain, leaving the data in the 10 blockchain intact. Still a little confused? Here is a great video to explain it a bit better with visuals.
How is Blockchain Being Used to Improve Your Life?
Since its reemergence in our culture in 2009, blockchain has had a transformative effect on a number of industries. Its potential is still being realized today and could become the standard in data security and governance very soon. Its impact can be seen in a variety of ways including:
- Banking and Finance– instead of waiting 3 business days to process, blockchain can verify transactions in as little as 10 minutes. This a largely important with large transactions where the value of one currency could change in a matter of a few days reducing or enhancing the value of that transaction.
- Healthcare Records– Patients can feel comforted as they know their medical records can be stored privately and cannot be altered.
- Property Records– When recording property rights, there is always a bit of red tape that is incredibly inefficient and time-consuming. Blockchain can provide verified data that can be trusted, eliminating much of the run-around.
- Supply Chain Management– The food industry is increasingly adopting blockchain technology to track the origins of the food supply, ensuring authenticity in organic, local, and fair trade products.
- Tracking Votes– Blockchain technology could nearly eliminate election fraud. Even reducing the possibility of fraud has been known to increase voter turnout. It would also increase the speed at which we can call the election races. Blockchain was already tested in 2018 in West Virginia during midterm elections with great success.
Embrace Blockchain in the “Information Age”
Blockchain is here to stay. As we become more data-driven, blockchain technology will be vital to securing that data. Its simple protocols allow for transparency and accountability in a world that doesn’t have an abundance of it. With so many practical applications still being discovered every day, we are just learning how impactful this technology will be to our current way of life.
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