Blockchain—the buzzword that many have heard of but only a few actually understand it. Today, we will tackle the ins and outs of blockchain in another edition of the DECENT 101 educational series. We will even go a step further and explore why it is important, as we dissect the simple, but loaded, question: “What exactly is blockchain, and why should I care?”
Going Over the Blockchain Basics
To understand the basics, let’s use the following definition and then dive deeper to explain it in more detail:
Blockchain is a tamper-proof list of transaction data that is copied and spread among a network of many computers dispersed all over the world. This dataset is recorded in a “block” and linked to the one before it and the one after it by a cryptographic “chain”, hence the technology’s name–blockchain.
Let’s break this down a little further. Transaction data refers to not only financial transactions, like buying pizza with Bitcoin, for example, but extends to the transfer of anything of value, such as the deed to one’s house or the pink slip of one’s car. This greatly broadens the spectrum of possibilities for the technology and strengthens its desirability.
The network of computers dispersed all over the world are known as nodes and are responsible for performing tasks which keep the blockchain running. These nodes are dispersed globally to guarantee a decentralized network and prevent any single point of failure issues that centralized networks can encounter, making the technological framework extremely secure.
Transaction datasets make up a so-called digital ledger which is stored in blocks. The size of these blocks, as well as the frequency a new block is created, vary per blockchain. However, once the criteria are met, a new block will be created and cryptographically linked to its predecessor via a specific barcode-style string of numbers and letters.
This link applies exclusively to the two blocks linked together, and, once created, it cannot be duplicated or altered. Any attempted changes to the block data within would modify the cryptographic link, and therefore be rejected. This high-level of security runs throughout the entire blockchain, creating a completely immutable dataset.
Traditional Datasets vs Blockchain
In the business world, datasets are used for a multitude of purposes from research to product development. They are usually managed by an administrator(s) allowing them to make modifications to the data within. This system is perfect for recorded information which needs to be updated or altered from time to time, however, it can lead to certain issues of data corruption and misinformation.
Traditional datasets are stored on complex servers, typically in a centralized location for convenience or easy accessibility. Problems with this model arise when there is a server failure or a malicious actor (“hacks”) into their servers. Backups are always kept, but depending on how often the data is backed up, tons of data can be lost, or needed to be recreated costing companies bundles of time and money.
Blockchain technology has built-in immutability, protecting it from the issues mentioned above regarding data corruption or misinformation. And since the infrastructure is spread out among many computers all over the world, the decentralized network is immune to single-point of failure issues like server fallouts or simple hacker attacks. High-levels of encryption and security can be implemented in both systems, however, blockchain is revered as one of the most secure systems developed to date.
Centralized and traditional datasets have had many more years of innovation to help with data warehousing and load-balancing, meanwhile, blockchain data is still in its infancy and cannot yet handle the speeds we’re all accustomed to. Even still, the wave of the future is leaning toward the decentralization of data, making blockchain technology a preferred upgrade for many of the worlds largest businesses.
Why should I care?
Ok, now you have the basics of blockchain down but why should you care about it? It’s not like you’ll ever see or use it in your daily life, right? Wrong! Blockchain has been deemed the “Internet 2.0” because of its potential to revolutionize the way we use everyday technology. The security of an immutable public ledger along with the speed and transparency of a distributed, decentralized network of transactions make blockchain an incredible upgrade to the current system.
Need another reason that everyone should care about blockchain? Technology, retail and banking giants have already begun researching and implementing blockchain solutions into their core architecture. Forbes recently released a list of “Blockchain’s Billion Dollar Babies” which compiles the top 50 companies valued at over billion that are looking into or have already started implementing blockchain technology.
Many of these companies may shock you as they are household names and products we already use on the regular. Industry giants such as Amazon, Google, Microsoft, IBM, Facebook, JP Morgan Chase, Visa, Mastercard, Samsung, Walmart, Nestle, ING and so many others are investing millions into this technology.
Almost all of these companies run their technology behind the scenes so that everyday people never see or even care to investigate how their processes work. However, when blockchain technology gets implemented it has the ability to impact your daily life.
Blockchain in Daily Life
In the financial sector, blockchain company Ripple is trying to replace SWIFT—the current standard for international bank transfers. The blockchain solution will allow for cross-border financial transactions to take place in a matter of seconds (as opposed to several days or more, which is the case right now). The significant reduction in payment processing times will benefit international banks and companies, making this the new norm in the banking world.
Companies like Walmart are implementing blockchain to help solve produce recall issues which have plagued the grocery industry in recent years. The technology will suffice as a supply chain management tool, where distributors and consumers can track produce literally from farm to table, giving us, the customers, piece of mind that the product is safe. Also, if any health scares arise, the company can trace it back easily to the source and save millions of dollars on the recall process. Speaking of supply chain, we’re also working with industry experts to help some of the quality assurance issues involved in the aviation and manufacturing spaces.
Make no mistake about it, the advantages of blockchain are vast and companies are just beginning to invest resources for research and implementation. These blockchain adaptations are just the tip of the iceberg as the technology has a long way to go before it hits mainstream adoption. This could, however, happen faster than you might think.
Things move very quickly in the technology sphere and with many of the worlds largest companies already embracing the technology, there is significant evidence that blockchain is the wave of the future.
If you’re interested in learning more about blockchain, stay tuned to our DECENT 101 series as much more content will be pumping out soon.