Blockchain is changing business as we know it.
One of the best definitions I’ve seen is from Don & Alex Tapscott in their book, “Blockchain Revolution:”
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Blockchain was first developed in a distributed form by Satoshi Nakamoto, who is either one person or several, but we don’t know exactly. The whereabouts of Satoshi are as mysterious and unknown as the benefits for this technology are great.
Blockchain uses a distributed ledger technology (DLT) rather than keeping all relevant data in one location. Bitcoin was the first application of blockchain technology, which is the backbone of this popular cryptocoin.
When a transaction takes place there are certain data points. These are put together into a block of information. Each change in the contract becomes linked to the previous blocks of information. When we chain all of those blocks together, we get a blockchain.
Each block has a link to the previous block. Part of the information contained will include the link to the previous block along with information for date/time and more about the transaction. Multiple parties can see the block, and it is immutable, it cannot be changed. This makes it more secure than a legacy system of keeping all data in one hopefully secure place.
Benefits of distributed ledgers
We’ve seen the serious problems that develop with security breaches. This happens when a lot of valuable information is stored in a central location. We saw the problems with Equifax and their data breach that exposed the sensitive, personal information for over 143 million people.
A distributed ledger would have prevented this. Breaking into one computer or one system is a lot easier than breaking into many that are decentralized and widely distributed. The decentralized system is also more secure, because to access the information, you have to have both a public key and a private key. The two-step verification system dramatically increases security.