Blockchain technology

Being on everyone’s lips, Blockchain technology took the world of Internet by storm as long back as 2008. Despite its widespread media coverage and popularity, many struggle to understand what blockchain technology entails and what potential it offers.

Blockchain was invented by a person (or rather a group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency Bitcoin. The records within blockchain (blocks) are linked using cryptography.

Blockchain technology is not a company or an app; it is an entirely new way of documenting data on the internet. The information recorded on a blockchain can take any form – a money transfer, ownership transfer, a transaction, someone’s identity, an agreement between two parties, or any other kind of data record. However, what is special, is the way this data transfer is done: it requires confirmation from several devices (such as computers) on the network not owned by any single entity. Once these devices reached a consensus to store something on a blockchain, it is stored there and it cannot be disputed, removed or altered without the knowledge and permission of those who made that record, as well as the wider community (P2P network).

To better understand Blockchain, you could compare it to a spreadsheet, with lines of data that can be modified at will. A good example is Google Spreadsheets, where users can make changes that the other users can see as they are being made. Blockchain, on the other hand, is different. Lines cannot be changed, they can only be added. The added lines are then checked for authenticity by all other members of the network, who all have an exact copy of the Blockchain. Changes to old lines are only possible if a majority of the network agrees. That is called a ‘Hard Fork’.

A Blockchain, originally block chain, owes its name to the way it stores data – blocks. These information blocks are then linked into a chain with other blocks of similar information. It is this process of linking blocks into a chain what makes the information stored on a blockchain so trustworthy. Once the data block is assembled, it cannot be altered without having to change every block that came after it, making it impossible to do so without it being seen by the other participants on the network.  So, there you have it – Blockchain.

At the moment, multiple organizations are already using Blockchain. For instance, in October 2018, two financial institutions in Australia conduct a mutual transaction using Blockchain. They traded  $ 35,000 worth of cotton from the US. As soon as the shipment reached its destination in China and it was scanned and entered into the system, and verified by the network, the money was transferred to the other party immediately and ownership of the goods transferred to the buyer.

DJ Hardwell and his company are also using the technology. He uses blockchain technology to manage the payments of his music. That guarantees a quick payment of royalties, with few mistakes. In addition to managing payments, the DJ also uses smart contract to record his agreements.

Blockchain is an ingenious way of passing information from A to B in a fully automated and safe manner. Each information block within the chain is initially verified by thousands, perhaps millions of computers distributed around the net, before being added to a chain. It does not just create a unique record, but a unique record with a unique history. Falsifying a single record would mean falsifying the entire chain in millions of instances, which is virtually impossible. Bitcoin uses this model for monetary transactions, but it can be deployed in many other ways.

All of this makes the Blockchain a transparent, decentralised and secure way of storing information. The technology has multiple possible applications next to cryptocurrencies: smart contracts, logistics supply chain, true ownership in video gaming, securing patient records in the medical sector and more. And those are just a couple of potential uses.

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