There’s a lot of hype around blockchain. Everyone has heard about Blockchains and distributed ledger systems, everyone has an opinion about them, and that’s the biggest problem. Some consider it as the most important technological innovation since the internet and some consider it a solution without a problem.

What is Blockchain?

According to Don and Alex Tapscott, the authors of ‘Blockchain Revolution 2016’, “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

Blockchain is an undeniably ingenious invention, the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. Everyone knows Bitcoin, at least by now, and the first original Blockchain is the decentralized ledger behind the digital currency, Bitcoin. The ledger consists of linked batches of transactions known as blocks, and that’s why the term blockchain. An identical copy is stored on each of the roughly two million computers that make up the bitcoin network. Each change to the ledger is cryptographically signed to prove that the person transferring virtual coins is the actual owner of those coins. Once a transaction is recorded in the ledger, every node in the network will know about it, thereby eliminating possibilities of someone using their coins twice. The idea is to both keep track of how each unit of the virtual currency is spent and prevent unauthorized changes to the ledger. This is the USP of Bitcoin, that no one can cheat the system.

Other digital currencies have imitated this basic idea, often trying to solve perceived problems with Bitcoin by building new cryptocurrencies on new Blockchains. But advocates have seized on the idea of a decentralized, cryptographically secure database for uses beyond currency. Its biggest boosters believe Blockchains can not only replace central banks but guide in a new era of online services outside the control of internet giants like Facebook and Google.

History

Bitcoin surfaced in January 2009. It was an open source software, meaning anyone could examine the code and reuse it. At first, Blockchain enthusiasts simply examined and improved on Bitcoin. One of the examples – Litecoin, a virtual currency based on the Bitcoin software which seeks to offer faster transactions. One of the first projects to repurpose the Bitcoin code to use it for more than just a currency was Namecoin – the traditional domain name management system that helps your computer find our website when you type nyxditech.com. Essentially an address book for the internet. A lot of people have argued that this traditional approach makes censorship too easy because governments can seize a domain name by forcing the company responsible for registering it to change the central database. The US government has done this several times to shut sites accused of violating gambling or intellectual-property laws.

Namecoin tries to solve this problem by storing .bit domain registrations in a Blockchain, which theoretically makes it impossible for anyone without the encryption key to change the registration information. To seize a .bit domain name, any government would have to find the person responsible for the site and force them to hand over the key, which is highly unlikely. Since then, there have been a lot of advances in the Blockchain technology. The primary categories of Blockchain use-cases are lightweight financial systems, provenance tracking, inter-organizational record keeping and multiparty aggregation. Sectors like banking, insurance, government, identity management etc. are the ones which have tried and used Blockchain.

The industry is already experimenting with using Blockchains to make security trades more efficient. Nasdaq OMX, the company behind the Nasdaq stock exchange, began allowing private companies to use blockchains to manage shares in 2015, starting with a company called Chain.

Durable, Robust, Transparent and Incorruptible

Blockchain technology is like the internet in that it has a built-in robustness. Blockchain stores blocks of information that are identical across its network, and therefore it can neither be controlled by any single entity nor has a single point of failure. Since its inception in 2009, Bitcoin Blockchain has operated without major disruptions other than instances of hacking or mismanagement which are not conceptual flaws but are human errors or wrong intentions.

The blockchain network lives in a state of general agreement, one that automatically checks in with itself every few minutes. It has a virtual self-auditing ecosystem of a digital value under which a network reconciles every transaction that happens in ten-minute intervals. Each group of these transactions is referred to as a “Block”. This results in a state of absolute data transparency within the entire system. It can neither be corrupted by altering any unit of information on the Blockchain.

Conclusion

Although Blockchain has been around for a decade now, it’s still premature to call out its future and determine its potential. Blockchains can minimise fraud and maximise efficiency, security & transparency in supply chains, global money systems, healthcare, financial technologies, democratic elections, auction of public assets, energy trading, electronic record authentication, delivery of Government services, IoT and much more. The potential is huge, we just need to calmly let the technology grow and give it a fair chance.

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