Blockchain is a global online database that can be used anywhere by anyone with an internet connection.
Unlike traditional databases that are owned by central figures like governments and banks, a blockchain doesn’t belong to anyone. With an entire network looking after it, cheating the system by faking transactions or documents becomes impossible.
How it works
Blockchain stores information permanently across a network of personal computers. It not only decentralises the information but distributes it too.
So how does a multi-purpose online database used by millions stay relatively hack-proof? The answer is blockchain’s millions of users. They make it impossible for any one person to take down the network or corrupt it. People who run the system use their personal computers to hold records submitted by others. The records are known as blocks. Each block has a time stamp and a link to a previous block forming a chronological chain. It is like a giant Google doc with one significant difference: you can view it, add to it but you can’t change the information that is already there. The blockchain enforces that by using a formal map called Cryptography which means records can’t be counterfeited or altered by someone else.
Blockchains most famous application is Bitcoin, a digital currency that is created and held electronically and can be sent to anyone whether you know them or not. Bitcoin provides a level of anonymity because there is no middle man, unlike banks and other financial institutions asking for our personal information and home address. Instead, people from all over the world move the money by validating the transaction earning a small fee in the process. Where Blockchain comes in is verifying the ownership of this digital cash and making sure only one person is claiming it as their own at a time.
There are multiple benefits of using blockchain like an increased level of security, less cost and better experiences.
The technology has the potential to help those in low-income countries by speeding up the flow of cash and providing a secure place to keep records.
From protecting our identity to running self-driving cars to managing a world that is increasingly dependent on IoT, the possibilities of blockchain are numerous.