Blockchain for beginners!
By Naoimh Reilly
Blockchain is the new technology in town. Everybody is talking about it and everyone is claiming to implement it into their business. But what does it mean and is it all it’s cracked up to be? Could it be the first real revolution of the Information Age?
It was borne of developers who realised the current banking system is fundamentally flawed. They believed charging extortionate banking fees was unnecessary and that waiting five business days for a transaction was laughable. With blockchain, real time transactions are possible without the need for a third party. These transactions are not only free, but are safer and with less chance of fraud.
Blockchain has the potential to transform how human society trades and functions because it allows information to be distributed, but not copied.
It was originally created for the crypto-currency Bitcoin but can be used for other technology also. It is, apparently, an incorruptible digital ledger, which can record financial transactions and anything of value.
Any information held on a blockchain is updated and reconciled across all of its locations. It’s duplicated across a network of computers and can be shared but will always update. Its database is not stored in any one particular location, meaning that all the records are truly public, open and fair. It’s hacker-proof and easily verifiable.
A blockchain spreadsheet is hosted by millions of computers simultaneously and anyone can access its data. It stores blocks of information that remain identical across the internet. With this system, no one person can control or manipulate it, which allows for the highest level of accountability.
There have been no known machine errors with Blockchain; only human hacking attempts. All transactions are recorded and no exchange can be done without consent of the parties involved. All these transactions are validated.
Even billionaire investor Warren Buffet sees the potential in blockchain, while simultaneously dismissing Bitcoin as a “rat poison squared”.
It’s considered a game-changer for the internet in the sense that it removes the need for centralised servers and it has the potential to speed up file transfer times. The blockchain network automatically checks in with itself and updates every 10 minutes. It then reconciles every transaction.
Because anyone can, in theory, join and view a blockchain; it lends itself to mass collaboration and the possibilities are only beginning to come to light. It could be used for many different things that we haven’t even considered yet.
The way blockchain is stored across an open source network eliminates many of the risks that come with traditional networks. It uses encryption technology as a security method, takes away the middleman and users can transact securely directly with one another. The most logical use is transferring funds from one person to another instantly, which could lead to investors saving money by being able to manage transactions themselves.
If blockchain is used within companies, governance becomes fully transparent and verifiable. Some companies are using it to reassure its customers that its ethical provenance and environmental claims are real. Blockchain also comes with timestamping of date and location.
It is also particularly useful for monitoring supply chains and paper trails, which is not just good for the supplier - but even more so for the consumer.
Products can be viewed from a quality control perspective and can be followed from manufacturing right through to delivery. It will be easy to verify quality claims this way and promises that a manufacturer or company has made.
It could be used to create safe digital IDs. People can face identity challenges for many different reasons, including poverty. This could help people setting up their own businesses, or gaining access to financial services.
It’s a public registry that no one person can control or manipulate. It has the capacity to transform our economic systems in radical ways by giving transactions far more transparency. It also allows us to write contracts in code without a third party.
Copyright laws can be difficult to implement and navigate. Blockchain can change this, ensuring artists and creators of the content can prove ownership.
By doing this, it will also be easier for them to get royalties. It can be used for retail, loyalty awards, voting, land and title transfers - all without using paper. You could trace the origin of your food with it, securely backup all your data and prove you’ve paid your taxes.
These are only a few examples of how blockchain can we used and we still have not come close to realising its full potential yet.
It essentially lowers uncertainty and this could potentially be the biggest revolution since technology itself. It could change the need for centralised systems, such as banks, governments and corporations. We may no longer have to rely on middle men to facilitate human economic activity. What if we can remove the middle man once and for all?