What is Blockchain?
The ceaseless search has been going on for a lot of time to boost the power, speed and security of the computing systems. Block chain seems to be an ideal target and the answer to that search. It simply removes the middleman from the process which by the effect of itself increases the speed of computing and removes many potential security issues. Many businesses and industries such as financial organisations, gaming industries, graphics companies and online business have been studying it to use or have already started to use it.
Searching ‘block chain’ on Google leads you to Blockgeeks which tops the results and which focuses more on bitcoins and cryptocurrencies. This, the people looking for it on google would be reminded of the bitcoin revolution and other cryptocurrencies.
Both blockchain, originally ‘block chain’ and bitcoin have been invented or designed by the same unknown person called as Satoshi Nakamoto. This is the reason for the close association of these two cryptocurrencies. The peer-to-peer transactions that are carried out using a bitcoin are simply devoid of a middle man. There are network nodes that register or verify these transactions and then these are transactions are registered in a blockchain.
This definition may not serve you well, so I feel I need to take a step back and come back to the original question.
What is this thing called blockchain?
The Google dictionary defines blockchain as “a digital ledger in which transactions are made in any of the cryptocurrencies and are recorded in a sequence of time and made available to the public.”
A blockchain consists of a list that includes a number of ‘blocks’ that are sorted according to the time frames, are linked together and are secured using cryptography. In the initial phase, when this term started to be used in the tech circles, it was linked entirely to a popular cryptocurrency called Bitcoin. Most probably, because it eased the understanding of the term for people who were hearing such a concept for the first time.
It is an amazing technology in the terms of security and quickness. It has replaced a process that is prone to hacking attack due to large security loopholes in copying unencrypted information and also due to the level of sophistication that hackers have achieved. Blockchain technology, on the other hand, does not copy the digital information but distributes it. That is why it is hailed as a revolutionary technology that is potentially the game changer in setting up a new kind of internet.
Let me provide you with an example transaction to make the process clearer. A person, anywhere on the net, passes a request to start a transaction. It is transmitted to a peer to peer network. This peer to peer (also called P2P) network is made of nodes which is the name given to the computers that receive the transmission.
The transaction is then authenticated by these computers or nodes. They also authenticate the status of the requester by exploiting some established algorithms.
There are various things that can be included in an authenticated transaction such as one of the cryptocurrencies (Ethereum, Litecoin, Bitcoin etc.), accounts, registries or any other type of digital information.
Different verified transactions are included in a single block. This process is followed by another process in which each block is time-stamped, given a unique number and locked by means of several complex mathematical processes. Once the information is added in a block, it remains there for good and cannot be changed that means it is permanent and cannot be altered in any way, basically because of such an advanced degree of cryptography and a huge amount of computing power that went into making it possible.
Don Tapscott of the of Blockchain Research Institute argued that anything that represented in codes such as the important personal information of the people and data can be put securely in the blockchain. He went to the limit of suggesting the same to the governments and public institutes.
This was a big thing to say. How much it will affect everything is unthinkable and if we take the contracts only into the question, it would make the work of checking the contract again and again before signing and making or rejecting a deal easy using the information that can be quickly accessed.
The arguments of some of the scholars such as Jacob Soll, who argued that the invention of double-entry book keeping once enabled the rise of the nation-state and of the capitalism, has been debunked, Mr Alex Tapscott. He stresses the need of the today’s internet which is the ‘Internet of Everything’ and which needs the ledger of everything. He calls this ledger the WWL (world wide ledger) of WWW (world wide web). This is such a revolutionary concept that it should frighten or scare the hell out of any country zealot and conspiracy theorist)
This is one of the steps into going for a single world government making the borders and fences irrelevant. This government will be able to keep in check the status and whereabouts of each and every citizen of the world. Many people see it as a necessity in the world which has surpassed the 7 billion mark where presently it is not possible to know by any authority whether everyone is playing nicely or not. This step would enable the world to see whether everyone is getting their deserved share of food, shelter and medicine. Those who choose to keep out of the system would face difficulties in getting even the basic of the facilities such as food, electricity, shelter and medicine. The world would be able to see if everyone has gotten their share of food or not.
The further definition of this digital ledger that blockchain is given below.
A blockchain can be seen as a single database that is distributed all over the internet by making many duplicate copies. Thus, the database is decentralised and is not fixed on a single place. It can be updated frequently by different users by the means of nodes. This decentralisation of the data is the main thing that is made possible by the use of the blockchain.
The database where the information is stored in a blockchain is a shared resource and is frequently reconciled. The records can be accessed by anyone as the data is decentralised and is not stored in a single physical location but on millions of devices spread across the different locations worldwide. This makes it possible for anyone to verify this data from anywhere and at the same time almost impossible for any hacker to hack or corrupt.
Advantages of blockchain technology
There have been numerous possibilities that have been introspected to have been opened up by the use of technology, from past to the present day. We are tending to include the things related to this technology in our usage list. Many of the benefits have been established while some have been introspected upon.
One of the examples can be the collaboration methods that we use on various documents. The document is sent to a certain person for editing and to make changes and that document, then, is sent back to the first person after making changes and revisions to it. This is a cumbersome process as the wait times reduce the efficiency. If the first person wants to make some more changes then he would again repeat the same process on and on.
Another factor is related to accessibility. In a traditional database system, If one person has to use one account or document at a time, the other person is locked out and cannot log in at the same time. The other person can log in and make changes to the document after the first one has logged out. They may be sitting physically on parallel desks but they remain disconnected in the virtual world, in the field of their work (a document here). This process truly depicts the working of the banks that use traditional methods. The transaction requests, when made by a person, are sent to the bank that spends time and resources in checking, verifying and making sure that the transaction happens the way it is supposed to happen.
This not only adds layers of complexity to the process but also the time spent on each and every transaction. One can imagine how much it may cost an international financial organisation over the period of the day, working over different time zones.
In the blockchain technology, however, this process is made easy because the system can be used by more than one user at the same time, it is decentralised, the ledger is a single database and the process can be verified easily. It is obvious that it would save time and money.
Safety of Blockchain
A small group or machine is not what is used for a blockchain, rather it comprises of a huge network of multiple machines and computers. Even if many of the computers or servers go down, it would not affect the blockchain as there would be many others which would be connected to the network.
This means that the blockchain is decentralised and no single entity controls it and because of the same reason it cannot be failed by any single machine or entity.
Bitcoin is one the examples of this technology. Satoshi Nakamoto realised it in 2008 and released the bitcoin program in 2009. The blockchain of ‘bitcoin’ has been running without any issues since then.
There is a sad story related to bitcoins and the man who mined over 7500 of them in 2013. When his computer crashed and stopped working, he made unfortunate decision to dump his computer along with his bitcoin wallet on the hard disk. To his surprise or shock, he later discovered that he threw away $80 million worth of bitcoins in the trash. Then, he decided to get his hard disk back from a landfill site by removing at least 25000 cubic meters of trash over it.
There was another person in the US who bought a $25 pizza by paying 10000 bitcoins for it. Though, it is not counted as a total loss as a transaction was made. Probably, it would have been the most expensive pizza in the history of mankind.
Who is the controlling authority of blockchain?
It is one of the most interesting fact related to the blockchain that has been mentioned in various other places of this text.
“There is no central controlling authority of the blockchain.”
That is because it is a decentralised system. Any of the cryptocurrencies use their own network and are not dependent on any centralised connection or network. A powerful and authoritative country called China has tried to control bitcoins. It raised some waves in the world and the prices of the bitcoins went down for some brief moments but it could not do anything to it any further and the bitcoin not only restored its position but went on a rampant march of increased value.
Where will it be used?
It is mentioned in the beginning of the article that the blockchain has the capability to remove the middleman in banking and other financial transactions. It is also shown that how beneficial it can be for the financial institutions and needs no mention that they will have to opt for it sooner or later.
The bank, who has been acting as a middleman till now, would be removed from a financial transaction between two users and see its control in those transactions fading. It does not mean that banks do not like this on the opposite they would be benefitted by various means such as data management and record keeping. The people or developers, who will be able to develop blockchains, will be hired by the banks for as much as they want. In fact, the banks have already been on a lookout for the developers of the blockchain.
The next thing on the internet is surely not going to open overnight and if we are on a lookout we can the see the future shaping of the web 3.0. The potentials and the applications of this technology cannot just be placed on one place. They call for more articles and many perspectives.