Blockchain, when we hear this term, the first thing that comes in our mind is cryptocurrency. Blockchain is actually a record-keeping technology which is used in the cryptocurrencies. Bitcoin is the first widespread application of blockchain technology.
In 1991 Stuart Haber and W. Scott Stornetta have first outlined the blockchain concept to make a system where timestamped documents could not be altered. Because of the huge success of the Bitcoin, it became a miss understood fact, just like believing sharks are hungry man-eaters after seeing the sharks attacking humans in the movies. In this post, we are going to see what the blockchain really is and the big picture about it.
What is Blockchain?
When you google search the blockchain, this is the confusing definition you get.
In this definition, the bitcoin and the cryptocurrency is an example mixed with the actual meaning. The actual definition should be like this.
“a system in which a record of transactions made are maintained across several computers that are linked in a peer-to-peer network”
Ok, I accept, the above-mentioned definition is raw and it doesn’t help you to understand completely. In simple words, a blockchain is a record-keeping public system.
The actual meaning behind the word block & chain is;
Block – data or digital information
Chain – the database
A series of data or digital information is chained together. Whenever you make a transaction or purchase, the detail about the purchase like the amount, date, method of payment, etc, are created and they are known as the blocks.
For example, let us assume that we buy a brand new BMW car from a showroom. When we buy the product, the details about the purchase are created as a block is added to that particular BMW car’s chain(the database). After a few years, we sell the car to a person named Jack, this transaction will create another block which has the transactions made by Jack and is added to the BMW car’s chain. When Jack decided to sell the car to Jill, the transaction between Jack and Jill is created as a
The best thing about the blockchain is each product has its own code called the “hash”. So that even if we buy another BMW car from the same showroom, that car has its own block and chain. With the help of the hash code, we can find the product on the ledger and can know the complete history of it. More or like the ID’s we have. Speaking of ID, since it is an open database you might be worried about your personal data privacy; that’s what we are going to see next.
Is My Identity Safe On Blockchain?
The answer to this question is, of course, it is. In the blocks, only general data like the time, product, manufacturing date, etc only is shown directly. Your personal identity is saved as a unique digital signature so your personal data remain anonymous. Though many big tech giants are finding business opportunity in the blockchain concept, Microsoft is finding a solution for the user identity problem and personal data crisis. Microsoft believes that they can use the blockchain as an encrypted digital hub that can interact with the user’s data by honoring the user’s data privacy. This shows that blockchain respects your personal identity and let you control it.
Important Characters Of Blockchain
Now that we know what the blockchain really is, let us talk about its basic characteristics of it to understand it better.
Decentralized Distributed Ledgers
Anyone can view the blockchain contents. If you wish, you can even connect your computer to the blockchain network and stay updated whenever a new block is added to the chain. Just like using our social media accounts, when a new block is added to a chain it will be shown as a post. Like this there will be thousands of copies of the same information is stored in different computers. This makes the information decentralized i.e: no particular person/organization can control it. By keeping many copies of the same information makes the tampering of the original data hard.
The “consensus” mechanism. As we told before, the blockchain ledger copy will be there on everyone’s computer connected to the blockchain network. Even if a person altered his/her copy, the original untampered copy will be on another computer. When the blockchain identifies multiple blocks with the difference in data, it activates the “consensus” protocol. In this consensus process, the blockchain will adopt the longest chain(that is it will adopt the copy that has the highest number of identical data). This consensus mechanism will help us make many security and identity applications.
Since there are thousands of copies of the same record, it will be hard for the hackers to alter it. I don’t say it is impossible, but it is very difficult to alter all the record copies on the blockchain network computer. In my WordPress Information disclosure error post I mentioned that, once the hacker gets into your server, they can manipulate the data. But in the blockchain even though the hacker managed to get into one system, he or she can’t alter all the clones in the blockchain network.
In theory, the hacker will need thousands of goblins to alter each and every record on the blockchain network computers.
For What Blockchain Can Be Used
Since it is a public digital ledger, it gives transparency and increases the credibility of a product or service. In this modern age, everything from shopping to paying is done through online services, hence the blockchain concept can be used to solve many real-world problems.
Can Design User-Centered Application Without accessing personal information – in order to provide personalized recommendations and better experience to the user some applications keep on tracking you and use personal information to identify you. We can use blockchain to make an ID hub to share information by restricting access to personal information. Since the user can control their personal data, it will make the user feel safe in the digital world.
Secure digital identity for everyone – the decentralized nature of the blockchain gives users sovereignty over their identity. The immune system of the ledger and the way it cross verify the data and maintaining the originality(the consensus mechanism) of the data let the user easily have their own identity. This case will be very helpful for refugees to easily claim their identity.
Copyright Protection and Preventing Piracy – if you are in the entertainment field, you will know how difficult is to retain the copyright and preventing piracy of your work in the digital world. Since everything is time-stamped on the blockchain, you can easily track the digital contents. The artists can get their rightful share whenever the digital content is downloaded. Another advantage in the blockchain is you can easily distribute the royalty of your digital content.
Digital Voting – Voting is every citizen’s fundamental right. But we can find voting fraud or error when placing our votes. Using blockchain we can let the people register their vote safely and securely through digital. Plus, the immutable character makes sure that your vote is not altered and is accounted properly.
Supply Chain – People in making physical products will always have the pressure of monitoring the supply chain. This also helps businesses to monitor whether the same quality material they ordered is shipped. If we extend this process, we can even let the customers see the entire history of the product from the material to the production time.
Real estate property management – Real estate is one of the most competitive fields and they are the ones who adopt the technology to the fullest to have an edge over the fellow competitors. Using the blockchain, the real estate people can clearly show the past ownership of a property and debts the property has undergone. Transferring property rights will also be very easy.
Health care organizations – the World Health Organization (WHO) estimates that there are nearly 8% of medical equipment are from fake companies. With the help of blockchain, we can easily search and find the originality of the product before buying them. Plus, counterfeit medicines can also be found easily when we adopt the blockchain mechanism.
World trade – trading will become very easy using the blockchain. Already bitcoins have proven it financially that one can easily buy and sell products easily in the global market. We can further extend it to analyze product quality.
Banking – Blockchain will offer faster settlement when compared to other traditional banking systems. When banks integrate blockchain in their system, even bulk transactions and settlements can be done within minutes. Working hours will be reduced, which results in less fee. Capgemini, a French consultancy, says that people could save up to $16 billion in banking and insurance fees each year when they use blockchain-based applications.
Data Sharing – Data is everything in the current digital world. If you have more data, then you can understand your customers better. But many companies overdo this and infringe on the user’s privacy. By using blockchain we can structure the data that are shared. Cryptocurrency IOTA has launched a marketplace where companies can share or sell unused data.
Hope this post helps you understand the blockchain concept better and how people in different industries can use it.