Many people mistakenly believe that blockchain is the technology that only supports bitcoin, even though this was not its primary aim. Despite how the term “blockchain” sounds, it is capable of much more. “Blockchain” refers to a collection of distributed ledger technologies that can be used to record and track virtually anything of value, from financial transactions to medical information to land titles.
What makes blockchain so unique? Why blockchain technology has the potential to alter the way we interact? The first reason is how it tracks and keeps data. Blockchain technology organises data into “blocks” that are chronologically linked to form a continuous line or a chain of blocks. If you change the information contained in a particular block, you do not rewrite it; instead, the change is logged in a new block indicating that x changed to y at a specific date and time. If this sounds familiar, blockchain is based on the centuries-old technique of the universal financial ledger; it is a non-destructive technique to track data modifications over time.
Assume an argument arose between two individuals over ownership of a piece of family property that has been for generations. Just because blockchain technology uses the ledger method, there is an entry in the ledger showing that the first person owned the property in 1950 when he sold the property to a second person in 1970. When the first person sold the property to the second one in 1970, a new entry in the ledger was made, and so on. Each change in ownership of this property is recorded in the ledger, up until a fifth person purchased it from the fourth one in 2020 and is now the current owner. That transaction history can be comprehended from the ledger.
Now comes the intriguing part. Unlike the time-honoured ledger system, which began as a book and evolved into a database of files maintained on a single machine, Blockchain technology was created to be decentralised and dispersed over an extensive network of computers. This decentralisation of information mitigates data tampering, which takes us to the second aspect that distinguishes blockchain from other technologies. It establishes trust in the data before adding a block to the chain. A couple of things must occur. To begin, a cryptographic puzzle must be solved, which creates the block. Once the riddle is completed, the computer that solves it distributes the solution to all other computers on the network. This is mentioned as proof of work. The network will then validate this proof of work and, if it is correct, add the block to the chain. Combining these complex mathematical challenges with verification by many computers assures that each block on the chain is trustworthy. As a result of the network establishing trust for us, we can now engage directly with our data in real-time, which gives us the third reason why blockchain technology is so revolutionary—no more intermediaries.
Currently, when we conduct business with another, we do not show the other person our financial or business records; instead, we rely on trusted intermediaries such as a bank or lawyer to view our records and maintain the confidentiality of that information; these intermediaries foster trust between the parties and can verify them. This is because blockchain is a type of technology and not a specific network; this type of trustworthy peer-to-peer interaction with our data can revolutionise how we access, verify, and transact with one another. It may be implemented in a variety of ways. Specific blockchains can be entirely public and accessible to everybody. Others can be restricted to a small number of authorised users, such as your business, a consortium of banks, or government entities.
Additionally, hybrid public-private blockchains exist. Only individuals with private access have access to accurate data. In comparison, the public has access to only a limited number of selections. In others, everyone has access to all the data. However, only a select few individuals have access to upload new data to a government database. For instance, it may use a hybrid system to record the borders of property owned by individuals and the fact that the person owns it while keeping his personal information private. It could allow anyone to examine property records but keep them reserved for themselves. The exclusive right to update them is the result of these elements: decentralising data, establishing trust in data and enabling us to engage directly with one another. The data enables blockchain technology to underpin many ways we interact with one another. However, similar to the internet’s growth, this technology will engender a slew of complicated policy issues around governance: international law, the economy, and security.
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