What is Blockchain technology? How will it transform our world?

First and foremost, blockchain technology was created to serve as a decentralized verification process. Whereby each user determines what information should be included in the blockchain, and agree, on the rules of cooperation, without the oversight of a centralized server, or governing body to interfere with or manipulate the transactions. Each transaction can then be monitored transparently on the blockchain. The proof of the transaction is embedded into each block as is otherwise known as a “hash”. Each block contains the hash of the previous block and its encoded content. This means that all blocks are linked together (hence the word “chain”). So if someone were to change a block of data, the change of data would attract attention because the content of that block would no longer match the other blocks following it, and possibly, blocks preceding it. Depending on what information was changed.

In essence, blockchain is a shared LEDGER or database that records transactions. The key to Blockchain however, is that the ledger is immutable. In other words, Unchangeable. Transactions cannot be changed. They are permanently and forever recorded in the block chain. And, as opposed to how a typical database collects and stores data via tables, blockchain collects data in groups. A.K.A Blocks. Each block has certain storage limits. So once they’re filled, they become linked to the previous block. And all new information will be added to new blocks which will then be attached to the previous block. And so on, and so on… This is the essence of Blockchain.

Let’s say there was an error in a transaction. That error is permanently apart of the Blockchain. It can never be changed. However, a new block can be created with the correct information. As a visual aid, imagine a link of a chain. Let’s pretend that link holds information of some sort. It could be anything, financial transaction, a document, etc. Now imagine a link attached to your first link, and then another, another, and so on. That chain becomes larger and larger. The more links in the chain, the stronger it becomes. Once information is on the block, it is forever on that block.

Blockchain may be most popularly used in the world of Cryptocurrency, but the use case for Block chain is Massive. Virtually anything of value can be tracked and traded on a blockchain. Things such as, a car, real estate, intellectual property, supply chain, financial transactions, storing one’s healthcare information on the blockchain and much more. The use cases are ever increasing.

Information is the lifeblood of a business. The faster that information is received, and the more accurate that information is, the quicker that transaction can be processed. Blockchain is ideal for delivering information because it is immediate, transparent, shared and immutable. Only permissioned users are allowed to access that information. A blockchain network is a secure means of transacting on an immutable ledger. There’s no limit to what Blockchain can be used for.

Another great reason why Blockchain technology will revolutionize the way we conduct business, is the use of smart contracts. A smart contract verifies transactions without the use of a third party. For example, if you want to wire money to a friend, or receive a Direct Deposit from your employer, the transaction has to go through a third party called an ACH (Automated Clearing House). They are the middleman of course and simply verify the transaction and collect a fee. The problem is that, it causes a delay in the transaction. Whereas, Blockchain is more immediate, cheaper and more secure.

There are four of blockchain technology that make it an irrefutably safer and more efficient way of storing information and transacting peer-to-peer.

Distributed ledger technology

• An immutable record of all transactions. Distributed ledger technology (DLT) securely replicates, shares, and synchronizes data across a distributed computer network. Blockchain is by far the most well-known distributed ledger technology. A Key advantage of (DLT), is that there are no “MIDDLEMEN”. Which can be cause of a single point of failure in transactions. For instance, in traditional transactions, we might use a bank to facilitate the transaction, well, what if that bank is closed, or has a system outage, or the person responsible for handling these transactions is out sick, etc. There’s many reasons why and how a transaction conducted in a traditional manner might fail. But with (DLT), your chances of success are Greatly Higher. Not to mention Lower fees to boot.

Immutable records

• Records cannot be tampered with, without that change being noticed. Any changes that need to be made, for instances of an error, a new block is created. Thus, providing proof of both blocks in the chain. All information remains as part of the chain.

Smart contracts

• A smart contract digitally verifies the performance of a transaction, without interference of a third party. Once the predetermined terms and conditions have been met, the Smart contracts are automatically executed.

Trustless System

• A trustless system does not mean “Not Trusting”, rather, it allows you to trust in the system without needing to trust in the parties with which you’re transacting with. There’s no “ONE” centralized entity verifying the transaction, such as a bank, instead, there are Computers all over the world that verify each transaction to confirm the transfer of value and create a historical ledger of all activity. These computers are not owned or controlled by any single entity. The process is real-time, and much more secure than relying on a central authority to verify a transaction.

Nothing in this article should be construed as financial advice. I am not a financial adviser. I am a cryptocurrency investor. As always, please Do Your Own Research (DYOR).