Blockchain: Here’s What You Need to Know
Now that we’re all caught up with our cryptocurrency, it’s time to learn a bit about blockchain.
Blockchain is a decentralized database that keeps track of all transactions using bitcoin or any other cryptocurrency. These transactions are stored together in what is called a block. This block is then connected to other blocks in chronological order. Updated in real time, blockchain includes a digital signature, which effectively secures the system from any kind of corruption or fraudulent activity.
Let’s take a look at the blockchain in greater detail, as well as its application, implication and use in the future.
What is Blockchain?
One of the key components of any cryptocurrency is that it’s decentralized. What this means is that this “currency” isn’t tied to any one institution or bank, and in fact, it is monitored by a large network of computers. People find this trait attractive because it ensures no interference from outside sources. But when we talk about a cryptocurrency being decentralized, we are really referring to a public blockchain.
You can think of a blockchain like a digital ledger, facilitating secure transactions across a network of computers. A blockchain records every little thing that happens using a process of secure communication called cryptography. Whenever someone makes a transaction and creates a block, identical information is transmitted to each and every part of the network. This is what is called consensus: authentication by mass collaboration, and is what allows bitcoin to be so secure.
Once a transaction is recorded, the data cannot be altered retroactively without the alteration of all other blocks. It is this process that makes the system impossible to hack, and what gives blockchain advantage over centralized forms of currency.
Blockchain and Banks
But what does blockchain mean for big banks? Although bitcoin is counter to what most banks are all about, these institutions understand the value of blockchain, as it would reduce processing costs tremendously and all but eliminate fraud.
By implementing a blockchain of their own (which would be a ‘private’ blockchain), banks would be able to become more valuable and efficient. In fact, Santander, a bank based in Spain, projected that they could save close to $20 billion a year by switching over the to blockchain technology. Meanwhile, the chance to start a new bank using blockchain has attracted a ton of new talent to the FinTech scene.
What’s Next For Blockchain?
Whether or not cryptocurrencies continue their current trajectory, blockchain technology will likely become ubiquitous. In a world where digital information is increasingly important, all types of industries are looking for ways in which to secure their own. As a decentralized database, a blockchain can provide this kind of security, while increasing efficiency and the speed of information.
What do we mean? Well, take for instance a hospital. Considering how much sensitive medical information they have about each of their patients, it’s imperative that it can be stored securely. Same goes for other industries where identity management may be crucial. That information is so private, that if it got into the wrong hands, it would be detrimental to not only those in said hospital, but the industry as a whole.
In any event, as humanity moves away from keeping physical copies, it is highly likely that blockchain technology will be used universally – and yes, we are crossing our fingers this happens sooner than later.