To understand Blockchain, one must start at the beginning. The very beginning.
Blockchain was created by an anonymous group or person known as ‘Satoshi Nakamoto’ in 2008 resulting from the need created by cryptocurrency, Bitcoin.
Because cryptocurrency was new in 2008, a new form of crypto-security needed to be invented in order to prevent hackers from conducting the world’s greatest virtual bank heist.
Think of Blockchain as a virtual ledger of sorts. It’s a way to decentralize ledgers. (Take note, the concept of decentralization is a critical part of Blockchain, which we’ll discuss later.) These virtual ledgers, however, can be simultaneously viewed on different devices, yet no one device or location controls the information. This is important because it means, in theory, that no one person or group can hack into the Blockchain and take the information or money.
So how does this Blockchain work?
Simply put, it’s a bunch of cogs that make up the machine. In this case, the cogs are called nodes, and the nodes are essentially computers. These nodes are all connected and make up the block. Like LEGOS – each piece is paramount to the ultimate structure, however no one piece alone makes up the structure. It’s part philosophy part engineering.
OK, but how is the information kept?
All the nodes keep the secured and shared information, and this information is distributed rather than copied.
Here’s an example. If you buy a house, your real estate agent (you used a realtor, right?) will send you a contract. You have to print the contract, sign it, and then send it back. Then the realtor sends it to the other party and they have to sign it and send it back. Then, once everyone has signed it, and the deal is done, another copy has to be sent to everyone for their records.
Are you confused yet? I sure am.
Let’s recap: one copy to you to sign, one copy you signed and sent back, another copy to the other party to sign, and they send another copy with their signature. Both realtors now send both parties the final copies with everyone’s signature. We’re at five copies now. FIVE.
However, here’s the fun part, with Blockchain, there’s only one copy. ONE. SINGLE. COPY. This means, the copy you signed, is the same copy they signed, and the same copy everyone gets to keep for posterity.
No need to keep track. No need to print. No need to repeat the process for each and every amendment made. One copy. For everyone. Just like one ring to rule them all. (ahem!)
How come Blockchain isn’t corruptible (or hackable)?
With banks, for instance, your information and transactions are kept in one central location. Hackers, bank robbers, or whomever, only needs to crack one location (maybe there are several firewalls or guards or whatever, but the point is there is only one slew of security to break through). And once they’re threw, they’re in.
On the other hand, with Blockchain, because the information is distributed in real-time on several nodes, it would be virtually impossible to break through all the security protocols at the exact same time in order to access the big virtual vault that is Blockchain. And experts say, corrupting any one piece of the Blockchain would end up corrupting the entire network and would require much too much power or resources.
And, it’s not controlled by any one person or company. Nodes are managed by innumerable private computers, which means no one really knows where they all are. A little scary, but on the flip side, very safe.
Accessing your data
Your next question might be, so how do you access your data? Typically, when you log into your bank account online, or your email, or your phone, or whatever, you enter in a username and password. Your username is usually your email address or a nickname you’ve given yourself, possibly even your first and last name with some sort of number on the end. Either way, you’ve chosen it. Passwords are nowadays a six-plus alpha-numeric combination you create. Perhaps even case-sensitive, and/or with symbols.
In the case of Blockchain, public and private keys are used. These act in the same fashion as usernames (the former) and passwords (the latter). The difference is, the public key is a randomly-generated set of numbers. Think of it as your literal address in the map Blockchain (also like a Swiss bank account number – no names or personal information is used). This helps to keep your stored information within the database as anonymous as possible. Private keys are, well, private. It’s your password. But because we’re trying to keep everyone un-hackable, it’s best to go old-school and print out your private key (that way no one can hack it).
What else can Blockchains be used for?
How long do you have?
The short answer is everything and anything that needs to be kept securely, or shared publicly. The long answer is, the sky’s the limit and not all applications have been thought of or tested.
In my research, I’ve discovered several really great modern-day applications that I think should be implemented right away.
We’ve gone through the real estate transaction example, which is a great one. Any type of record keeping or file storage or contracts can benefit from Blockchains, because it operates in real time, it’s public and (essentially) cannot be hacked.
The reason? Because of Blockchain’s transparency, supply chain management is a great use of this system. With growing concern over sourced ingredients, organics, farm-to-table, cruelty-free, sound farming and fishing, all items can be accounted for and available to the public.
Governance, elections, voting, etc. No more Florida recount, no more Russian hackers, no more fake news. Everything is tracked, transparent, verifiable and basically cannot be tampered with. Plus, with real-time information being processed, no more delays in reporting results. #Blockchainfor2020
Since Blockchain was created for cryptocurrency, it kinda follows that regular, old-fashioned banking with cash-money could also benefit from this kind of security. One could dream that bank robbers would be a thing of the past. Ba-bye Bonnie-and-Clyde-wannabes.
And the other side?
Any article with its salt will tell you about the downside to new technology. I mean, somebody’s got to, right?
Based on the information discussed, the obvious downside to Blockchain is the fact that everything on the Blockchain is open to the public and transparent. You’re relying on these thousands/millions of nodes to secure your information. So what happens if there’s a catastrophic system failure? Is there something large enough that it could take down the entire system? Perhaps. A zombie apocalypse is not entirely out of the question (read: natural disaster).
What if another anonymous collective, à la Anonymous or Satoshi Nakamoto decides to simultaneously hack the Blockchain? Is it still impervious to corruption at that level?
The truth is, because something less than a decade old is still considered new-ish, it’s hard to say for sure what flaws it really has or where its vulnerabilities lie.
One thing is for sure. With over 700 types of cryptocurrencies currently out there all requiring a state-of-the-art security, if they trust Blockchain, it’s probably a safe bet.