Many of us think of blockchain as the technology behind Bitcoin. While this was the original thinking, blockchain is much more than a single application
“Blockchain” is a term that describes several distributed ledger technologies (DLTs). In essence, DLT is a means to program, record, and track information – from financial transactions to government records. The reasons why blockchain technology is nothing short of revolutionary are these:
Tracking and storing data
Blockchain stores information in blocks linked to each other chronologically in a continuous chain, hence, “blockchain.” Changing information recorded in a particular block is impossible. The change is recorded in a new block that adds to the original one, recording the time of the addition. In essence, blockchain is a new and improved paper ledger of yore but with the added value of a non-destructive methodology for tracking data changes over time.
But unlike the age-old Großbuch, blockchain is decentralized and distributed across a ramified network of “nodes” – independent computers. The decentralized nature of this type of information dissemination practically nullifies the chances of data tampering.
Before a block is added to the chain, a cryptographic puzzle has to be solved. The node that solves it shares the solution with the rest of the network. It’s called proof-of-work. The network verifies it, and the block is added to the chain. The solving of complex math puzzles combined with an independent mechanism for verification ensures the trust in each and every block on the chain without the need for arbitrage by an intermediary. Speaking of which,
No need for intermediaries
In order to do business, we have to trust one another without having to disclose our business records. This is almost impossible without trusted intermediaries – a bank or lawyer – who undertake the task of ensuring that business partners can trust each other while keeping pertinent information confidential. This approach, while limiting risks, adds another step to the transaction, which means higher costs and more time.
If information (for example, a land title) was stored in a blockchain, you could cut out the middleman (lawyer) who would ordinarily confirm the information to an interested party. Because all blocks in the chain are verified to be true and cannot be tampered with, you can simply show your counterparty (client, partner) the land title information secured on the blockchain.
This means considerable savings of time and money. This type of trustless peer-to-peer interaction already revolutionizes the way we access information, verify it, and, based on automated reports embedded with the network, transact with each other safely and securely.