Blockchain technology is something that most have heard of but few still understand. In this blog we take a look at what it is and what you need to know about it.
Blockchain was created in 2008, however, the origin and its creators remains something of a mystery. The original name – Satoshi Nakamoto – was used, however, the identity of him is unknown.
Blockchain was invented to serve as a means to transact the cryptocurrency, Bitcoin. Such is the nature of the technology it has also evolved into being used across many industries across the globe.
In basic terms, blockchain is a growing list of records called ‘blocks’ that are linked. Each ‘block’ is then a cryptograph of the previous block and so on. A timestamp and data of the transaction is applied to each block. As the data becomes a cryptograph, this means the data becomes more secure and to a degree, unalterable. The purpose of this is to ensure currency can be passed by one person to another online, securely and without the intervention of others to access the data.
Person A is transferring funds to person B. Person A would reach to the bank first and ask them to transfer the money to person B. The bank would hold information on both transactions from the sender and receiver. The problem… It can be tampered with.
This is where blockchain comes in…
Using the same example with blockchain, the data is added to a block and then connects to other blocks in chronological order. The difference this time is that each step is in the form of a cryptograph, meaning the data, although timestamped, is undecipherable.
Blockchain is typically made up of 5 key components.
No authority can manipulate the data. Whilst the transaction takes place between two people, this data cannot be changed or deciphered for both parts of the transaction.
The ledger is spread throughout the network which makes data being tampered with, much more difficult.
Cryptography means transactions are tamper proof.
Data can only be added to the blockchain in time sequential order. This means that once data is added to the chain, it cannot be put into another order.
The most critical attribute of blockchain is its ability to decentralise the process. No party is in control of updating the ledger and no one authority can tamper the data.
Still a lot to take in?! Fear not, blockchain is a complex and difficult subject. As industry becomes more open to transacting digital currencies such as bitcoin, employees of organisations no doubt be clued up to help educate clients and customers on how it all works.
As it stands, many businesses and industries are currently examining how best blockchain can be utilised and in the future is widely expected to used in the transferring of digital currency to purchase real estate.
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