Blockchain has been steadily increasing its standing since its creation back in 2008 but its value as a revolutionary technology for the storage and dissemination of information is now undisputed, especially when viewed in the context of Covid-19 and the associated medical and financial complexities linked to the pandemic.
Similarly, Bitcoin (and other cryptocurrencies) are gaining momentum within the world of digital finance due to the complications of cash and monetary exchanges during this difficult time.
Blockchain technology (also known as Distributed Ledger Technology (DLT) allows information to be stored, shared and adapted in a totally transparent and observable way so that every alteration is visible and traceable.
This is ideal for financial transactions, medical records, or storage of any other data which relies on security, decentralization or instant adaptability.
Blockchain technology has the ability to benefit every industry around the globe and is likely to become the dominant technology for most applications in commerce and business within the next few years, so it is essential we understand the uses, applications and origins of Blockchain technology.
This article gives a brief introduction to Blockchain technology, ideal for those just beginning to explore it, but more detailed information is available via our IT courses.
What is Blockchain?
Blockchain is also known as Distributed Ledger Technology (DLT) and is specific type of database which offers a completely transparent and immutable history of a digital asset.
Blockchain differs from a usual database by the way it securely stores data (linking each block’s data) and the decentralization system which can be applied.
This is why it is ideal for so many different application and industries, but especially why it is beneficial for financial transactions and cryptocurrencies.
How does Blockchain Work?
Blockchains work by storing data in segments known as ‘blocks’, starting with the first initial block and then building and adding to these to form a ‘chain’.
Each block contains 3 pieces of information –
• Data – specific data relating to purpose of use such as, Bitcoin. This would show details of transaction including sender, receiver and number of coins.
• Hash – the unique identifying code relating to this specific block
• Previous block’s Hash – each block carries the previous hash and ensures the security of the chain. If one hash is altered all the following blocks become invalid which is why Blockchain is so secure.
The Blockchain becomes a ledger for data which allows real-time access, decentralization and transparency while giving the highest levels of security.
When considering how Blockchain works it is helpful to use a real example such as, Bitcoin.
Bitcoin uses thousands of computers to store every transaction ever made in its Blockchain. These computers, or groups of computers, are in various locations and are operated by individuals or groups of people. These computers are known as nodes.
This allows Bitcoin to be decentralized but it is also possible to use Blockchain technology for privately owned, centralized purposes.
There are countless uses for DLT from medical records, digital currencies and contracts to supply chain information, public records and crowd funding. Virtually every industry will have some use for this type of technology.