The Essentials of Blockchain—Going Beyond Cryptocurrency

Mention Bitcoin at a happy hour conversation, and you’re likely to start a great conversation—from those bemoaning the fact they didn’t invest in 2009, or those saying it’s all a gimmick. But start your conversation with “blockchain” and you’ll likely be met with a blank stare, to be quickly followed up with someone asking about the L.A. Dodgers.

The technology that Bitcoin is built on is little understood. Yet it is taking industry by storm. Corporations have found blockchain technology as a new way to solve many of their ongoing business problems. Or, they don’t want to be left behind and lose a competitive edge if they don’t start their own blockchain use case project.

Application of Blockchain

Just how is business using blockchain? Blockchain use cases involve everything from supply chain management to securing a data base. It can involve working with smart contracts and cover nearly anything related to the Internet of Things, or IoT. Financial, insurance, farming and manufacturing are all looking at blockchain to solve areas that are inefficient and costly due to paper intensive workflows or centralized database costs and controls.

But just what is blockchain? Will industry be able to adopt it and solve all of its issues? Many C-suite executives and IT managers are implementing research and development strategies in search of a solution. Blockchain is showing promise to transform the digital world in a way that will make data processing efficient, secured, and dramatically lower costs.

Blockchain is a public, digital ledger that is centered on a peer-to-peer network. It can also be private—but it is decentralized and “shared among disparate users to create an unchangeable record of transactions, each time-stamped and linked to the previous one,” that is, it is immutable. For every transaction on a blockchain, data is added and becomes another block in the chain. Thus the name. (Computerworld)

The Code

Here’s a simple explanation: Blockchain technology utilizes computer code that allows users to interact with one another in a way that is easier, faster, cheaper, and safer. It is touted to solve a fundamental problem of every data transaction—trust.

Blockchain is built on a transaction log or journal known as a distributed ledger. It is made up of a “list of transactions that refer to previous transactions, containing all of the transactions on that particular blockchain” from the time of the first block.  With a blockchain, you’re basically trusting that the code is less likely to misbehave than a corporation.

Steven J Owens offers a description in Quora. Blockchain uses a transaction log or journal known as a distributed ledger. It is made up of a “list of transactions that refer to previous transactions, containing all of the transactions on that particular blockchain” from the time of the first blockchain for that record.

All blockchain transactions are defined in a programming language like C++, JavaScript, Solidity, SQL and others. Used in combination they support various blockchain projects for smart contracts or connecting the IoT to blockchain. (freeCodeCamp)

The distributed ledger is stored on tens of thousands of computers, known as nodes. They are owned and operated by different people and dedicated companies.  In fact, anyone can “install the software, start it up and join the network, download a full copy of the transaction log from the existing nodes,” according to Owens. No one is in charge. There is no central database administration. Individuals with their computers and servers (nodes) are now members of the network.

Because it is a distributed network, it is decentralized, and the user doesn’t need to go through a database administrator to access the data.  Anyone can upload a transaction from any node.

According to  Lucas Mearian (Computerworld)  “Blockchain can only be updated by consensus between participants in the system,” and once data is entered, it’s immutable. Its permission level is a “write-once”, append. This is what enables it to be a “verifiable and auditable record of each and every transaction,” continues Mearian.

Another way of looking at immutability is that it is tamper proof. It is what makes the data a trusted source. It uses cryptography, a mathematical algorithm, and a hash to make it tamper proof.

 

Image Source: CNBC.com

Conclusion

With blockchain’s ability to be distributed, transparent, secure and immutable—there is quite a bit of optimism that blockchain’s utility beyond cryptocurrency can help industry solve many of ongoing issues. More and more, industry  leaders and IT managers are setting aside budgets and resources to explore use cases within their own organization.

 

Samuel H. is an author, writer and speaker with over twenty years in the educational technology sector.

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