The Blockchain technology is distinct from the internet technology and for long, an individual or a group of individual going by the nickname Satoshi Nakamoto was believed to have been behind the invention of the blockchain. However, an Australian by name Craig Wright has recently claimed that he is the individual behind the creation after remaining behind the curtains for long. The original invention was somewhat by accident than intent. Cryptocurrency or the more popular name coins was needed to support the decentralised functioning of the blockchain, and that gave birth to Bitcoin which continues to rule the crypto world even to this date. As early 2018, we have over 1500 siblings of Bitcoin going by different names and blockchain is the underlying technology that drives them all. Read on Comcast’s first multi-million bid on blockchain future.
Blockchain technology defined
There are many facets of the blockchain technology and the most important among them is its ability to allow distribution of digital information clipping the ability to be copied. This has given rise to numerous use cases, and the global financial industry has by far been the biggest beneficiary although application of this technology is in its nascent state. Recently Vienna University has announced a project named pantos for trading. Traditionally, moving money across borders is an expensive and time-consuming process, and blockchain technology squarely addresses both these issues by enabling near-instant transactions at a negligible cost.
From a layman’s perspective blockchain technology can be pictured as a spreadsheet that is duplicated several thousand times within a computer network. The network design takes care of regular updates to the spreadsheet, and that makes up the basics of the blockchain. The information contained in the blockchain can be shared and is reconciled continuously. The data within a blockchain is not stored in any central location which makes it genuinely public and verifiable with ease. In the absence of a centralised version of data, hackers will find it tough to access the data and inject malware. Blockchain data is hosted on millions of computers and can be accessed by anyone connected to the internet.
A concise technical definition of blockchain technology is that it is digital ledger that is programmable for recording financial as well as any other valuable data (land records, medical records, citizen records, tax information and so forth). Once the data is attached to a blockchain, it cannot be altered or corrupted, and that makes it the most significant boon for the digital world. If you are still struggling to come to grips with the basics of blockchain technology, imagine a financial transaction entered by a payment gateway and someone in the middle altering the amount or the recipient’s account information. The result of such an action can be chaotic. Blockchain takes away this ability to make alterations once the block is created. Every modification must be ratified by each member within the network, and in the absence of even one member disputing a modification, the transaction fails. Every time a new transaction is recorded it becomes a ‘block’, and the ‘block’ is added to the network. Once the transaction is broadcasted to the network, and when all participants in the network agree, the transaction gets added to the chain known as blockchain. At this point, the transaction becomes permanent and cannot be altered even by the network. No doubt blockchain powered central banks would be the next thing every investor would be looking for trust and credibility.
Absolute trust and transparency
Trust is one factor that is supreme with blockchain technology, and that is a commodity that is not only in short supply but also expensive. The data contained in each block cannot be altered or corrupted except in rare instances and overriding the entire network would consume massive amounts of energy. Any attempts to gain control over the entire network would also be fraught with other consequences like the destruction of the value of the bitcoins involved. Therefore, this is by far a hypothetical probability. See for yourself what is one of the pioneers of the game Vitalik Buterin has to say on it.
Extinguishes the role of middlemen
One of the biggest advantages of blockchain technology is that it extinguishes middlemen. If you explore a global trade, you will find that a big chunk of the money is claimed by the middlemen. They can be of varying hues, someone is knowledgeable, someone is close to powerful lobbies, someone enjoys monopolies over territories or products, and the list can go on endlessly. Financial transactions around the globe or cross-border payments exemplify the role of middlemen. When you seek to send, say AUD 5000 to your friend in New York, the chain involves your bank, a national currency authority for AUD, central authority for US dollars, a local bank in New York (a currency authority for the region perhaps) and finally your friend’s bank. All the participants within the chain claim a small percentage of your money merely for moving it from one part of the globe to another. On any given day of the week (barring weekends), massive amounts of money move across the globe and therefore these small drops of the fee charged to individuals, add up to a tidy sum at the end of the day. Once blockchain is fully integrated into the cross-border payment systems, it would potentially dry up this revenue stream for the middlemen.There are instant services you can access across the globe from transportation to hotels and restaurants.
Privacy of certain information can be compromised
Although your transactions using bitcoin or other altcoins are expected to remain anonymous, marketers of an ilk have their ways of short-circuiting machines to get what they want. By far most e-commerce sites use trackers and cookies to understand your buying habits. For your instance, if you were merely looking for hotel prices in a city, the machine assumes that you are planning a trip and you can be bombarded with related advertisements. But, if you are sending money to someone and the other person has access to all your financial history that becomes more than embarrassing.
Although the final days of 2017 and early weeks of 2018 witnessed frenzied activity in the cryptocurrency markets, blockchain technology continues to evolve, and we are only beginning to see the technology transitioning to other applications. Supply chain management, logistics, travel, banking, insurance, medical records are among potential candidates where blockchain is expected to deliver massive and desirable changes in the years ahead.