Blockchain. We hear this being talked about quite a lot, but what is it really and what does it do?
Blockchain in its core is super simple. Blockchain is a database. But unlike all other databases, its main feature is to remain unaltered once the data are entered and recorded. Other, non-Blockchain databases have data that can be edited, added to and manipulated. Think about your school for example. It will have a bit of digitally stored information about you, which will be added to and altered frequently (hopefully) to reflect your grades and progress. Blockchain, because the recorded information can’t be edited at all once entered, can hold digital assets securely and with clear ownership recognition.
Blockchain was born at the same time as Bitcoin, which is the reason why the two terms are so often mentioned together. When Bitcoin was launched by the mysterious Satoshi Nakamoto in 2009, it needed a secure place so people could ‘store’ their bitcoins; a system to document and organise undisputed, not hackable, ownership of Bitcoins and other cryptocurrencies. (https://www.marketbeat.com/financial-terms/what-are-cryptocurrencies). Blockchain therefore started as a sort of bank for Bitcoin.
Blockchain is organised in – guess what - blocks of 1 Megabyte each. New transactions, today still mostly Bitcoin, are stored in a block, until that block is full. The full block is then chained to the previous block, which separates all entered data in chronological order. Each block has an exact time stamp. The data entered in each block – unlike in ‘normal’ databases – will then have become irreversible and the individual, decentralised blocks are immutable. The data are as such set in stone.
But is a block of data/my Bitcoin safe from being tampered with?
In order to bullet-proof the blocks of Blockchain, each block has:
1) its own, time-recorded and timestamped data;
2) a unique digital signature (a Hash) of 256 numbers (SHA256), - (see link below for further info in Hash calculations)- as well as;
3) the unique Hash of the previous block.
The Hash identifies all the data in the block and when these data were recorded. Attempting to change or tamper with data in one block, even in the slightest, will change that block’s Hash. BUT, because the way blocks are linked, ALL Hashes of ALL blocks in the chain will change instantly when tampered with and it will ‘lock’ the system.
A last security layer for Blockchain is ‘proof of work’. For each new Bitcoin mined, the Bitcoin algorithm goes through a 10-minute-long-computational process to verify if a transaction is genuine. It will check and calculate a new Hash against all previous Hashes. If then the new Hash is approved by all the different groups of miners, the new block will be filled. This is why, when we want to pay or receive Bitcoin, it will take often at least 10 minutes for it to be processed and properly registered.
A great advantage of Blockchain is (say the people in favour), that it consists of various, decentralised, groups of computers and hence it is very hard for any single entity to control the network or to hack into it. The decentralised groups, called Nodes, consist of ‘miners’, who will originate and verify Bitcoin transactions against each other. On https://www.blockchain.com/explorer you can see the ‘live’ constant filling of blocks, the time it takes to ‘mine’ them, as well as the size of the transaction.
But Blockchain technology can be applicable to many other things than just Bitcoin. It is especially suitable for all things that require safe storage and the assurance that stored information can’t be changed. Examples are medical records (think a.o vaccination status), property deeds, identity cards and possibly voting ballots.
Blockchain will be a great vault for many of our digital valuables in the future and the undisputed proof of our ownership of big and small stuff: from houses, images, art, text, money and much more.
A geek’s domain? I think not. Blockchain could be the great un-blocker of things and it will likely change completely how we do things today. It may be time to get acquainted.
Further links:
https://hbr.org/2017/01/the-truth-about-blockchain
https://scet.berkeley.edu/wp-content/uploads/BlockchainPaper.pdf
https://www.unicef.org/innovation/blockchain-learning-hub
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