Why Blockchain just might be the next big thing in technology?
How many times have you tried to describe the blockchain in the simplest terms possible? How many times has your friend asked, What the heck is this blockchain thing you keep talking about? Blockchain technology might not be the easiest concept to grasp, but once you do, it just might change everything.
That is what some people are saying at least! If that sounds like hyperbole or click bait to you, then this post will help clear up why blockchain technology could be as revolutionary and impactful as we think it can be. Let us start with the basics and see where the post will end up!
The blockchain – a brief history
The blockchain was first conceptualized by an entity or group of entities that have never been identified. The use of a peer-to-peer network to record transactions is not new and has been around for decades, but what makes the blockchain different is that it can also store data. To use a comparison, the blockchain is like an Excel spreadsheet that anyone on a computer network can see, edit, and add to at any time. That means you don’t need a third party to verify anything because everything is verified by the people who participate in the network. In short: no need for expensive accountants or lawyers.
What is blockchain technology?
The blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Whenever a new block is added to the chain, it is very difficult for hackers to change or delete it because their changes would have to be approved by all other members of the network. This makes any records on a blockchain nearly impossible to tamper with or change without anyone noticing. To make these changes, someone would need to control over half of the network's computing power. That's practically impossible if not an unlikely scenario given that there are thousands of computers around the world maintaining and running this technology.
Use cases of the blockchain technology
The blockchain is a secure and transparent way to store data. It's decentralized, so it doesn't rely on any one person or company to keep information safe. This makes it hard for hackers to break into the system and change data. The blockchain also helps with issues of trust by making sure that there is a record of everything that happened without anyone having to do anything extra. Data is stored on computers all over the world, not just in one place. And even if someone does manage to break into a computer where data is stored, they would have no way of changing what was recorded before because everyone else has a copy too. Plus, every time data is changed it creates an entirely new block of information which is then added to the existing chain. As a result, every time someone tries to hack into a block of information, that hacker has to deal with all of these other blocks as well.
Blockchain for Finance, banking, and Capital Markets
The blockchain is a digital ledger that stores a record of all transactions that have taken place. These transactions are verified by people known as miners who set to work solving complex mathematical problems. Once these problems have been solved, these miners receive rewards for their work, in the form of new Bitcoins, and this is where bitcoins come from. Bitcoin is not backed by any centralized bank and can be used for peer-to-peer payments without an intermediary such as Visa or Mastercard. Transactions are public and transparent so there is no need for third-party verification; you know if the transaction has gone through because it will appear on the blockchain. There is no single point of failure with cryptocurrencies because they run on networks rather than having one server like your bank. As such, when things go wrong at one cryptocurrency company, it won't affect others because they are not connected – it is a decentralized network.
Blockchain Changing the Banking System
The first use of blockchain was by a person or group of people. The system they developed is called Bitcoin, and it is currently the most popular implementation of blockchain technology. Essentially, blockchain uses a decentralized database that is shared among all nodes participating in a given network, rather than relying on one centralized server. This means that when someone wants to add a new transaction to this database, say, transferring five bitcoins from one person to another, they first announce this transaction on the network. Then, every node or computer updates its copy of the list with this new information and shares it with other nodes. As soon as an agreed-upon number of these transactions are collected into what’s called a block and added to the chain, its authenticity can then be verified using an algorithm that generates hashes for each block.
Pros & cons of the blockchain technology
The blockchain is a decentralized, immutable ledger that records transactions between two parties. Transactions are grouped into blocks, and every block contains a hash pointer to the previous block. Blocks are linked together through cryptography which ensures data integrity. Data on the blockchain is public, and cannot be tampered with or changed without leaving an audit trail of those changes. If a hacker wants to change data on the blockchain they would need to recalculate every hash from that point onward, which is virtually impossible with today's computing power.
Blockchain in Automotive and Health Insurance
Blockchain has been applied to automotive and health insurance, with the aim to eliminate fraud. In these cases, a blockchain would serve as a public ledger of who owns which car at any given time and keep track of when drivers are speeding or driving recklessly. In the case of health insurance, hospitals could use blockchain-enabled smart contracts to automatically insure patients without having them fill out paperwork or submit physical paperwork. For example, if Alice breaks her arm while skiing and goes to the hospital for treatment, a simple scan of her driver’s license could trigger an automatic purchase of insurance from one of Alice’s preselected carriers on file. The hospital staff would then send all relevant information, such as treatment costs directly to the carrier so that they can determine how much coverage is required. Alice would not have to wait days or weeks to find out whether she needs medical care and how much it will cost; she may know within hours. One drawback of this type of system is that it requires coordination between multiple entities – Alice, her insurance company, the hospital where she seeks care, and possibly other third parties such as ski resorts – but it does reduce administrative work for providers.
Blockchain and Healthcare: Potential and Opportunities
A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, timestamp, and transaction data. This technology is radically different from other technologies that power current digital transactions because it has no central point of vulnerability that can be exploited by hackers or attacked by cybercriminals. For example, when you make an online purchase with a credit card, you entrust your personal information to the company’s servers and if those servers were hacked or corrupted (or even shut down) then your personal information could be accessed and used without authorization. When you conduct business on a blockchain system like Bitcoin’s network, for example, your private key can never leave your computer so there is no chance that hackers could steal it and use it without permission. The bitcoin ledger relies on hundreds of thousands of computers around the world to record every bitcoin exchange. These records are grouped into blocks and validated collectively through a process known as mining before being added to the global ledger which can only be updated by consensus amongst participants in the system.
Blockchain technology can solve major problems like cybersecurity and fraud, which cost businesses billions of dollars each year. The decentralized nature of blockchain makes it virtually impossible for hackers to steal information or money without being detected by other users. As more people adopt blockchain technology, global networks will become more secure and less vulnerable to cyber- attacks. In addition, the transparent and immutable qualities of blockchain make it difficult to commit fraud because every transaction is stored on a public ledger that is constantly updated with new blocks. The self-auditing nature of this process prevents one user from changing any data that has already been added as a block. And because everyone on the network has access to all transactions, no one person can go back and change anything after it is been recorded. That means if someone tries to spend the same bitcoin twice, for example, the second person who receives it will see that and reject it. If you want an analogy for how blockchain works, think about how your email account works: Your email account sends copies of messages you send to whomever you are corresponding with. This is all you need to know about the blockchain and how it will be the big technology thing in the future!