Hello everyone, Let me start by asking you a question. How many times you have to reveal your personal information such as your name, address, National identification number, your date of birth, your age, gender, your mother’s maiden name, your pets name etc in order to process a transaction or even to open a social media account? Quite often, am I right? Do you know that once you reveal all your information, you no longer own that information? Yes that’s right. You lose your own identity. The only solution to own yourself back is with Blockchain. Let me explain.
What is Blockchain.
In my article on Cryptocurrency, I explained that blockchain is the technology where Bitcoin is built upon. Even though Bitcoin was the main product which was revolutionary, the technology blockchain had its own unique paradigm. After the introduction of Bitcoin, people started realizing the technology behind is truly amazing.
Blockchain is a digital infrastructure. It is a self sustainable, peer-to-peer ledger system. It uses an integrated set of computer codes to manage and record transactions without an involvement of any central authority.
How Blockchain Works
Blockchain works through a network of computers who are independently verifying transactions. Let me break it down really easy for you. Imagine you introduce a special coin to be used among your friends. So you keep a ledger of everything that happens. Eg:A give 2 coins to B. B gave one coin to C etc. Now this is a simple ledger in a book or in excel. Problem comes when one of your friends want to steal a coin. He just has to adjust your ledger. How do you stop this? Well think about giving a long unique code for each transaction which is connected to the previous transaction like a chain. In blockchain this is called a hash. Now if someone wants to change a transaction he has to change the whole list of transactions which is not so easy.
But still you have only one record. Someone can just take it away and replace it with a whole new record of transactions. What can you do now? You can create a copy of the record and distribute it among all of your friends who are in the group and update all those records when a transaction takes place. Now for someone to steal a coin he has to change all the records with everyone entirely at the same time, which is not worth the effort.
This is exactly how blockchain works. It’s a digital ledger which records single transactions and all the transactions are connected to the previous one, like a chain. The ledger is distributed among a network of computers and majority of them has to verify for a transaction to go through. That means its a decentralized distributed ledger.
Following are the steps for a transaction to go through in blockchain.
- Transaction requested.
- Transaction broadcasted to the network
- Miners verify and produce a hash function
- Transaction confirmed.
- New transaction added to the blockchain
- Transaction completed.
Why Blockchain is so Attractive
As I explained above, bockchain works in an amazing way. That’s not the only reason why blockchain is important. It is an amazing tool due to its characteristics.
- Blockchain is public
Yes that’s right. The blockchain is publicly accessible by everyone in the system. That means all the transactions from its origin is public information. If you want to track down a transaction no one can stop you. Does that mean all your personal information is accessible to everyone? Answer is no. The transactions are public. Not the personal information of the people who do the transactions. That means only you own your information and you do not have to give any of your personal information to do a transaction. You can remain a Pseudonym. You own your information and no one can use that information, pretend to be you and do some kind of a crime. Blockchain recognizes you with your cryptographic key.
- Immutable and permanent.
The distributed nature and the cryptography, makes blockchain impossible to amend or to hack. Once a transaction takes place in blockchain it is there forever. No one can deny it or change it. The technology makes it impossible for it to hack and therefore information is immutable. You saw how difficult it became to make an amendment to a transaction in our little example. Now just imagine the records are distributed among millions of computers and updated real time and trying to change it.
Usually our information or details of financial transactions would be stored and maintained by a centralized authority. Eg banks and government institutions. If there is a break in to any of these systems the information can be stolen. This information can be used for so many criminal or fraudulent activities. Blockchain is impossible to hack by its nature. The technology allows you to track down a certain transaction or a product to its origin. The information is freely available and linked in a chain. This allows people to claim the originality of something. Just imagine about an exotic organic coffee you buy which is from Ethiopia. You would pay a premium just because it’s organic and from a country which produce best coffee.
But how would you know whether it’s organic or where it comes from? You just have to trust a company which sells it. With blockchain you don’t have to trust anyone. You can track the originality of anything by yourself. That’s how reliable it can be.
Blockchain does not controlled by one party or a group. It is architecturally decentralized. One of the best advantages of being decentralized is not having a point in failure. Think about a centralized server. If there is a technological failure the whole system fails. But blockchain does not have that weakness. This also makes it impossible for the network to shutdown. Some kind of disaster happens in the location of one computer doesn’t affect the network. For the network to shut down, millions of computers around the world have to shut down all at once. That is impossible and therefore the network will not shut down.
These unique features of the blockchain technology has unwrapped a whole new level of possibilities and applications. I have mentioned that blockchain is the platform used for bitcoin. Bitcoin was the main product. However blockchain technology itself came out to be revolutionary. There are so many governments, institutions and companies experimenting on various applications of blockchain.
Maybe one day in the future you will not be asked to reveal your personal information to third parties and finally you will be able to own yourself back. I will explain about various use cases of blockchain in my next article. Until then think of a world where you own yourself and everything else about you.
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