Even if you’re not a programmer or developer, you may have heard of the term ‘blockchain’ circulating around the internet, particularly in the last few years. It has created such a buzz, in fact, that it’s hard not to have heard of it at least a couple of times in passing.
Nevertheless, if you’re not a tech fanatic, or you’re not directly involved with the tech team of your company, there’s a very high chance that you’ve not taken the time to familiarize yourself with it. So amidst all the excitement and speculation, the primary question likely running through your mind is this: what on earth is blockchain?
Blockchain, originally intended for bitcoin, is an invention of a person (or group of people) going only by the pseudonym Satoshi Nakamoto. It’s a technology that allows the distribution – but not copying – of digital information, paving the way for a new and revolutionary type of internet. The tech community, however, is discovering other potential uses for it.
In order not to be confused, it’s important to note foremost the difference between bitcoin and blockchain. Bitcoin is a digital currency, also referred to as “digital gold” – and for a very good reason. The total value of the currency to date is a whopping U$9 billion, and you can find both established and new trading platforms for the crypto currency. Blockchain, on the other hand, is a technology by which bitcoin operates. And as a technology, it can also create other kinds of digital value. Fortunately, you don’t have to know the detailed nuances on how blockchain works; you just need to have a basic understanding of it.
Blockchain in a Nutshell
Simply put, Don and Alex Tapscott, authors of the notable book Blockchain Technology in 2016, defined it this way: “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.”
Using a ledger as an analogy for blockchain makes for a strong comparison. After all, it’s quite easy to picture blockchain as a spreadsheet that’s copied thousands of times across a network of computers. The computer network is designed to regularly and frequently update the spreadsheet. Information on a blockchain is a shared – and continuously updated – database, which comes with considerable benefits. For instance, the database isn’t stored in any single given location; this spells out that the records are kept public and can easily be verified. And because it is hosted by millions of computers at the same time, the data is accessible to anyone with an internet connection.
Comparing Blockchain with Google Docs
Venture advisor, entrepreneur, marketer, strategist, and blockchain specialist William Mougayar nails it down beautifully when he compares blockchain with Google docs. This is how he puts it. “The traditional way of sharing documents with collaboration is to send a Microsoft Word document to another recipient, and ask them to make revisions to it. The problem with that scenario is that you need to wait until receiving a return copy before you can see or make other changes because you are locked out of editing until the other person is done with it. That’s how databases work today. Two owners can’t be messing with the same at once. That’ how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again).”
“With Google docs (or Google sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people. Imagine the number of legal documents that should be used that way. Instead of passing them to each other, losing track of versions, and not being in sync with the other version, why can’t *all* business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow. You don’t need a blockchain to share documents, but the shared documents analogy is a powerful one.”
Durability and Strength
Blockchain technology is similar with the internet in that both of them have a built-in strength or robustness in them. Because identical blocks of information are stored across it network, blockchain is noted for two amazing features: (1) it cannot be controlled by a single entity, (2) and it doesn’t have a single point of failure.
Since it was invented, blockchain has run without any considerable function. And until now, all problems associated with bitcoin have been linked to mismanagement or hacking. In short, such issues are the result of either human error or bad intention (or both), not errors found in the concept of the system. The internet has proven itself to be more than durable since it started a few decades ago; blockchain holds similar potential as it continues to evolve and develop.
TEDx Speaker Ian Khan concludes with these words to ponder: “As revolutionary as in sounds, blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.”
What are your thoughts on blockchain technology, especially if you’re a business owner? Are you well versed about it and can easily share your insights on the topic, or are you just getting acquainted with it? Share us your thoughts in the comments section; we would love to hear from you.