The Basics of Blockchain
Blockchain is a shared online ledger that records transactions between parties efficiently and in a verifiable and permanent way.
Blockchain technology was invented to support the cryptocurrency bitcoin, but it has many other applications outside of finance. Blockchain can be used to manage identities, property rights, voting systems, supply chains, food traceability — virtually any process where you need to record events without tampering or revision. Here are some ways blockchain will change society:
- It will completely disrupt how we do business by making trust less important than transparency for most transactions.
- It will transform our privacy by giving us more control over what information about ourselves we want others to see and use.
- As a result of these changes, it may even lead to dramatic changes in global politics.
How Blockchain Technology Works
Blockchain is a digital ledger that records transactions between parties efficiently and in a verifiable and permanent way. Each transaction is represented as some number of bits (called data blocks) on a chain of bits (called blockchain). Blocks can never be altered or removed. The linking of blocks ensures the permanence and verifiability of transactions.
Blockchain allows us to do business without a bank, and it could even eliminate money as we know it. Here’s how:
When we make a financial transaction using blockchain, we can include small bits called smart contracts that define exactly how each party should interact with the other. For instance, if I’m borrowing money from you with a blockchain-based smart contract, the contract would ensure that every time I pay you back some of your loan plus interest, you immediately transfer it to an account where only you can access it.
Blockchain technology is disrupting the way we do business, and it has the potential to change society. These changes may include everything from more transparent business practices to new political paradigms.