You may have recently heard of the word “blockchain” being thrown around in certain articles or news stories. Specifically, blockchain comes up when the crypto-currency Bitcoin is being mentioned. Sometime the term is used interchangeably with Bitcoin which is inaccurate and can give blockchain a bad stigma, making people believe it is only something hackers use to stay anonymous. However, blockchain is very interesting technology that may just revolutionize the way in which we make any type of transactions in the future.
What is Blockchain?
Blockchain technology is designed to let you safely exchange any type of digital property (like money) without the need for a middleman (like banks). Skipping the middle man then makes the transfers faster, and cheaper. Blockchain is also a hard coded permanent record of all transactions that ever happened, once information is added, it is impossible to remove. This does not allow anyone to change the record of what transactions took place, making it a reliable record of what happened. Since no one can change the records, the blockchain is a trustworthy source of information that lets strangers agree that a transfer happened even if they do not trust each other.
Blockchain has also solved the double spend problem. Digital money, like bitcoin is just a computer file, so it would be easy for someone to copy, paste and counterfeit it. When digital money is spent, its publicly added to a receivers account, so if a scammer tries to spend money twice, it can easily be discovered. Not needing a third party to handle the double spending problem allows digital property to be sent directly from one person to another.
How Does Blockchain Work?
When a transaction is sent (using the example of money), that transaction is recorded on EVERY record of the blockchain around the world. Each copy is an identical record of all transactions. Once one stranger gives money to another, now every stranger has a record of the transaction, the blockchain then compares all the transactions to make sure they all match. If a record does not match throughout the blockchain, the transaction does not get approved.
When a transaction is approved, it is placed into the block and given a unique transaction code. This code in the blockchain is directly related to past transactions and future transactions, making it impossible to go in and change. This permanent record will make it safe for people to directly exchange digital property without an expensive middle man.
What Use Does Blockchain Have?
- Entertainment: now people have the ability to pay an artist directly. Readers can pay authors directly. Artist can now self publish onto blockchain platforms and cut out all middlemen.
2. International Payments: Payments by companies and individuals become fast, cheap and secure, blockchain also ensures the money changes hand fairly.
3. Voting: With blockchain people could vote directly and from anywhere. Voting can be securely counted in a system that cannot be changed after the fact.
4. Ownership Records: By permanently recording everything, this technology automatically ensures that the ownership for anything purchased can easily be proven. Currently purchase records exist in paper or items that can easily be corrupted or lost, changing this can reduce the possibilities of fraud and disputes.
5. Charities: Donations can now be tracked all the way from giving, receiving and spending. Blockchain can ensure that donations get to right people and used for what was promised. This allows for more transparency and accountability.
There are many more uses for blockchain and the technology is still in its infancy, but as more and more practical uses come up we can start to see a huge shift in how we will exchange property. We will also have a more secure online market where people can trust that their personal data will not be compromised.