So we’ve established the fact that Bitcoin has revolutionised the way transactions work. And it’s all thanks to the technology that created it, the blockchain technology. What do we know about blockchain technology, besides the fact that it has paved the way to a new era? These are 3 essential things you should know about blockchain.
Imagine a never-ending spreadsheet that gets copied over and over through a network of a thousand computers. This spreadsheet is verified and updated regularly. Everyone can see what’s on the spreadsheet, even newcomers to the network gets a copy of the whole blockchain and its entirety of historical data.
The spreadsheet is not stored in any single location, which means that no one can control or manipulate its data. All the information on the spreadsheet is public and accessible by anyone. In essence, a mass collaboration occurs where the check-and-balance of the transactions are maintained by the network of computers.
Now imagine ten thousands of transactions happening at the same time across the network. The blockchain network is designed to live in a state of consensus, where the network of computers continually reconcile all the transactions that happen in ten-minutes interval. This ecosystem means that the data stored is virtually incorruptible.
To get technical, transactions are bundled into blocks before being added to the database. These blocks are referenced by a hash function (which is basically data turned into a mathematical function) from contents of previous blocks instead of sequentially with simple integers 1,2,3. So if you were to take one block and change the hash, when the block is recalculated by another computer, the whole chain will break and consequently invalidated.
These two concepts makes it really hard to change any data within the block. You would need a significant amount of computing power just to hack one block from the chain. And not to mention, you would have to rebuild and rehash each block after the changed block so that the chain doesn’t break. It’s definitely not worth the time, energy and money you would have to waste to hack it.
Let’s say you’re in the supply chain business. In order for a product to get from the supplier to the end customer, it has to go through a complex network built up by suppliers, manufacturers and other intermediaries. Think of all the information that has to be passed through the network, unverified and relying fully on trust between the parties in the network.
What blockchain technology can do is put all the information on one ledger, public for all to see. Relevant parties can maintain a comprehensive historical data of contracts, form and agreements as well as any other records without having to rely on papers or intermediaries. It can easily solve the problem of data manipulation.
Blockchain has many other unique features that are advantageous for its adopters. In future posts, we will explore more on how industries can potentially benefit from blockchain technology.