What is the future of technology? We are hearing buzzwords all around with Vladmir Putin saying “The nation with the best and the most advanced Artificial Intelligence technology, they would be the one who would have control over the world”. But today, I will not talk about Artificial Intelligence (AI), as we have heard quite enough about it lately with Elon Musk and Zuckerberg fighting over whether AI would be a boon or a curse for us . But today I’m going to talk about a technology which is currently making waves and will change how the industry would work in coming years for sure. “Blockchain”, the technology behind the cryptography currency Bitcoin.
Many people know it as the technology behind Bitcoin or the cryptography currency, but Blockchain’s potential uses extend far beyond digital currencies.
Currently, for transferring funds, what happens is, people simply depend on a middleman such as a bank, which ensures the transaction between two parties is being done successfully. But with Blockchain, it enables consumers and suppliers to connect directly and perform the transaction; removing the middleman , in this case the bank.
So now, the question here is, what the heck is Blockchain?
Blockchain is fundamentally a ledger, a record keeping book. A ledger meaning, it keeps the track of transactions taking place. What is a ledger? They are essentially private – we don’t tend to share that information of transaction with anyone. But what Blockchain says here is that the ledgers would be public and will be accessible and are going to be shared across all people of interest and that’s the foundational aspect of Blockchain, It’s basically a record keeping system which keeps a track on any transaction taking place between two parties and also keeping the record public .
The next question that arises in mind would be “What about security”? Is it safe? What if hackers try to hack that particular chain of transaction and retrieve data from it? What then?
The answer to this question is pretty convincing as well as one of the main reasons for the breakthrough of Blockchain. What happens is, when a transaction goes through , cryptography secures the data and the new transactions are always linked to the previous one’s in the chain, making it almost impossible to alter older records without having to change the subsequent one’s. The linking I’m talking about is done by storing “hash”. Each block is identified by a cryptographic hash of that data. The same hash will always result in that data, but it is impossible to re-create data from hash value. Previous block will have the hash of its previous block embedded in it, and so if a new block is added to the chain, the new block would have a field which will store the hash of its previous block and so on. This is the reason it’s hard to tamper with. Diagram below shows how “hash” are stored.
Also, as I said there are multiple computers/nodes which run in this network. In order to gain control of the whole system, one would need to gain access to more than half of the computers in the network.
Okay after that you’ll probably think – How will this actually work?
Let me explain to you in a very simple language, with a diagram:
Have a look at the diagram, it shows the simple flow of how Blockchain actually works –
- It simply requests a transaction, that request is broadcasted to Peer-to-Peer network consisting of other computers known as nodes.
- These network of nodes, validates the transaction and the user’s status using what is known as algorithm.
- A verified transaction can involve cryptocurrency, contracts, records or other structured information.
- Once verified, the transaction is combined with other transactions to create a new block of data for the ledger.
- The new block is then added to the existing blockchain, in a way that is permanent and unalterable, it cannot be tampered with easily.
- The transaction is complete.
The concept of Bitcoin is not restricted to just a record keeping book for transaction between two parties, the concept has now evolved a lot, and is being used in quite many different ways.
A company named Bitnation, is using blockchain for a different use altogether (other then using it in bitcoin) – cryptocurrencies. They started a project aiming to decentralize everything. What they are doing is to provide a digital ID; more of an emergency ID card, to the victims of the refugee crisis and bitcoin-based credit card which can be used to receive funds from family member and/or friends without involving any bank accounts. This can also be a way of identifying an individual through family relations cryptographically.
Also, many major companies are now trying a way to simplify and to better understand supply chain, where blockchain can record every step through which your product goes through before you see them at your local store. You can eventually go back and check that the promises they give of Green tea being 100% organic, or the price of the product, are actually what they should be. It will give a level of transparency like no other.
Blockchain is also being implemented in Music, Fashion industry as well.
You can just imagine the countless possible scenarios that Blockchain can be tweaked according to our needs. I’m currently researching more on Blockchain as it is quite vaste, will update this blog as soon as I’ve got something new to share.
“Pranav Harshe is a consultant at Systems Plus. The content of this blog is personal & for information purposes only, and is subject to change. Reader discretion is advised”