2017 was an exciting year for blockchain
While the bulk of blockchain news concentrates on cryptocurrency and bitcoin, the real reason why blockchain is exciting is that its structure can be used for other sectors, including sustainability.
Blockchain, the buzzword of the year, the fairy dust that is supposed to solve all our problems. It’s the technology that underpins Bitcoin and most other cryptocurrencies which it is often confused with. However, the umbrella of distributed ledger technology has applications beyond cryptocurrency. Blockchain is a digitized public ledger of all cryptocurrency transactions. These transactions include Bitcoin (BTC) and rival currencies like Ether (ETH) and Ripple (XRP).
Today, we see adopters in business environments in nearly every industry, ranging from financial and banking, through manufacturing and supply chain all the way to intellectual property, healthcare or real estate. Blockchain brings a promise of a secure, cost-efficient, transparent and easily auditable way to track any asset. Physical goods can be tokenised, traded and tracked through virtual peer-to-peer (P2P) and distributed business networks without requiring a centralised point of control.
but what is it?
Blockchain is made up of digital hashes or ‘blocks’ that are then made up of four components; A transaction timestamp, the asset or data transferred, a unique cryptography signature and the hash from the previous transaction. These blocks all interlink into a chain of blocks which then make up the Blockchain, resulting in each transaction being connected to the next.
The way that Blockchain is created means that it is as close to being unhackable as possible. To hack the Blockchain, you’d need to hack the block you’re trying to hack, all the preceding blocks in the whole Blockchain, on every system that is within the blockchain. Not just on one computer, at the same time whilst decrypting the most secure method of encryption on each block.
why are blockchain and cryptocurrencies a big deal?
Many people have said that Blockchain is the technology likely to have the biggest impact on the next few decades, which is a bold statement given other emerging technologies such as; AI, IoT and Robotics consistently appearing in news headlines.
The reason why people think that Blockchain will have such a big impact on the future is the way that it will have an effect on the Financial Services sector. There are concerns with the current system we use to transfer goods and money, such as security, which is becoming an increasing problem. Current intermediaries like banks, governments and credit card companies are centralised and the current system can be quite slow. It can sometimes take days or weeks for money to be transferred and is highly susceptible to fraud.
Blockchain allows transactions to be stored, moved, made and managed without those intermediaries. Which would theoretically lead to a reduced cost, reduced complexity of financial transactions and improved transparency and regulation on transactions, whilst making transactions almost instantaneous and more secure.
Although Bitcoin is the first thing that comes to mind when Blockchain is mentioned, it could have much more of an impact on other transactions than just currency. Blockchain could be used to transfer any asset with a value including agreements, stocks, shares, intellectual property, music, video and more.
the technology behind blockchain
Large databases require a lot of compute power. As databases grow over time, they eventually slow down. Blockchain gets around this issue by running on a P2P network of all the computers running the software. This also includes miners who have a vast amount of compute power (some have estimated that the entire computing power of google would be only 5% of the Blockchain computing power) to solve complex cryptographic puzzles in return for new bitcoins.
One of many reasons why enthusiasts are excited by Blockchain is the fact that it runs on a system where data is decentralised. However, this could cause future transaction issues as the processing power for transactions will only increase as the amount of systems on the P2P network do too.
the future for blockchain
The future of Blockchain may be reliant on governing bodies buying into the system and implementing it in the public sector. It will also be reliant on big tech corporations including Amazon, Microsoft and IBM working together to standardise the Blockchain systems. If all of this happens then we could see a great increase in the speed of transactions, improved security on transactions and a completely new e-monetary system.