What is Blockchain Technology?
For a simple analogy, lets look at Wikipedia – which is an online content and article repository which continues to grow over time. You might not have realised it, but the way in which Wikipedia works is similar to that of Blockchain technology.
Well, to put it into simpler terms, a blockchain is a place where people can put down entries in the form of recorded information. From then on, community users can monitor how this recorded information and record of information are updated and amended.
Going back to our analogy and example – Wikipedia is a large database of articles which have been written reviewed, updated, and which are added to over time. Wikipedia has a large number of article writers, each contributing to the overall database from their own areas of specialisation and expertise.
This kind of mass contibution and custody of data is a tried and tested approach, and Blockchain is just the next evolution of the idea.
Over in the world of blockchain technology, everyone on the ‘blockchain network’ plays a key role in checking and verifying the data, and no one individual has full control of the entire recorded information.
Both Wikipedia and Blockchain run on distributed networks
There is something else which makes blockchain technology very precise and valuable.
Both Wikipedia and blockchain run on varied distributed networks which sit on top of the internet. But while Wikipedia has its basis firmly on the World Wide Web (WWW), it uses a client-server network model. This enables the client some power over the data entered and stored on the centralised server.
Users of the Wikipedia platform can also edit this key information. Updated master copies are made available to these users and clients, whenever they open the Wikipedia page to access this information. The Wikipedia administration team has the mandate of controlling such databases which enables them to dictate who accesses these pieces of information and data.
Taking a closer look, Wikipedia’s digital backbone can be compared with the tightly protected centralised databases of governments, banks insurance companies and other institutions. The owners of these databases control centralised master copies of data. These institutional owners are also able to exercise control over updates on management, and are responsible for protecting their information from cybersecurity threats such as hacking.
The difference with Blockchain
The major difference with Blockchain though, is that it has a diverse infrastructure backbone, or rather a distributed ownership model. Blockchains are not controlled or owned by one centralised entity or institution.
Going back to Wikipedia, whenever there is an edited version of a master copy of a data record, all users are updated with this and they see this on the server. In Blockchain technology, all nodes in its networks behave in a similar way. Records are updated independently with those most popular ones becoming the chief or better called de facto official records due to their being the master copy.
Any transaction on the blockchain is broadcast and every node creates their own updated version of events as they unfold. This feature gives blockchain technology a useful and very favourable feature. Blockchain enables a level of creativity in information mastering and distribution which eliminates the need for a trusted agent or central party to govern and assure digital relationships.
Blockchain technology has been developed over many years, as a result of existing technologies evolving in a more advanced and secure manner. It is not a new technology since it captures all aspects of other digital technologies in a specially designed blend to meet the ever-increasing demands in modern technology.
In a nutshell, Blockchain technology combines aspects of the internet, version control, secure data transmission, and private key cryptography. All of these protocols combine and lead to the successful innovations, such as bitcoin technology – which could well be the future of digital currency and online online consumer and business transactions. This blend resulted in a high-quality technological innovation which does not necessarily need a trusted third party to carry out a business transaction.
Defining Digital Trust
Trust in simpler terms, is a risk judgment between parties.
In the modern digital world, the determination of trust among parties requires identification to prove the authenticity of information and the parties involved and also approving permissions or authorisation among the parties.
When it comes to Blockchain technology, trust is a key factor since it is used to authenticate different parties and assure the ownership of assets.
With services built on top of Blockchain (including Bitcoin) – the possession of private keys spares one party from sharing deep and personal information they may be asked to provide for a transaction to take place. This is key to protecting individuals and firms from potentially exposing themselves to hackers who may pose a threat to their security.
Upon authorisation, it is mandated that parties striking deals should broadcast the right transaction types to avoid cons in the market. As well, there should be enough money or monetary assets when striking such transaction deals. Coupled with efficient technology of distributed network, risks of centralised corruption and failure in transacting are much reduced.
Removing 3rd Party Middlemen
A great advantage to using Blockchain technology for authentication and the execution of business deals is that there is no need to rely on expensive third party mediators to assure the trust.
The business world continues to witness the adoption and application of trust principles in Blockchain technology. This has included data sensitive institutions such as governments, banks and IT firms all making the move to implement cryptographic keys in their transactions through secure and authentic Blockchain technology.