People fear what they don’t understand and hate what they can’t conquer. This quote, attributed to Andrew Smith, often appears in discussions about social issues, but it rings true in the world of technology as well. With the rapid pace of technological advancements, keeping up can be challenging. Many of us find these new systems confusing, and even threatening. In a previous article, we discussed how a majority of us still find AI and Robotics a controversial element in creating digital artwork. After all, we used to have computerphobia, back in the day. For this generation, perhaps blockchain could easily well be the equivalent of a technology people remain wary and dismissive of. So, is blockchain something we should worry about?
To find answers, let us take a look at the definition and see if our preconceived notions could be improved.
What is Blockchain?
Blockchain provides a trustworthy way to store data. The Center for Governance and Innovation defines blockchain as a shorthand for a whole suite of distributed ledger technologies that can be programmed to record and track anything of value, from financial transactions and medical records to land titles. It’s like a shared digital diary where everyone has the same copy, and once something is written, it cannot be erased or altered. This can be used for lots of things beyond money, like making sure voting is secure or verifying the authenticity of art.
To understand further, let us first break down the essential parts of a single block:
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- Data: This can include any type of information stored within the block.
- Hash: Think of this as the block’s unique fingerprint; If the data changes, the hash will change too.
- Hash of the Previous Block: This element creates the link between blocks and ensures security.
Note: The very first block in a blockchain is known as the “Genesis block.” Its unique position means it does not refer to any previous block.
The interconnected nature of these blocks means that any changes made to one block have repercussions for the entire chain. If someone tries to modify a block—say, by tampering with its hash —every subsequent block would be rendered invalid as they would no longer contain the correct hash from the previous block
How does it work?
To help you further understand this technology, take a look at this example:
Imagine using blockchain to track product origins in a supermarket. Each time a product, say a banana, moves from farm to store, a new block of information is added to the chain. Everyone—farmers, distributors, store owners—can verify and track the banana’s journey. So if there’s ever an issue, like a recall, you know exactly where that banana’s been.
Is it secure?
You might be wondering about the security of this system. Such concerns are indeed valid, which is why mechanisms like proof of work have been developed. Modern computers can process vast numbers of calculations swiftly, so proof of work acts as a control mechanism that slows down the creation of new blocks. For example, generating a new block for Bitcoin typically takes about 10 minutes, making unauthorized alterations challenging since a hacker would need to rework every block’s proof of work across the chain.
Another layer of security comes from the peer-to-peer (P2P) network structure of blockchain. Anyone can join this network, and new participants receive a complete copy of the blockchain. When a new block is added, it is verified by nodes across the network.When the information gets fully verified, the block is seamlessly integrated into everyone else’s copy of the chain.
This decentralized consensus is crucial for validity; if a block has been compromised, the network will reject it, ensuring that the information remains intact. To successfully tamper with a blockchain, an individual would need to alter every block, recalculate proof of work for each one, and control over half of the P2P network—all of which is nearly impossible. This securely safeguards the data stored within the system.
Where do we use blockchain?
While blockchain technology is most commonly linked to Bitcoin and NFTs, it could be used across other industries. Here are a few examples:
Supply Chains:
Blockchain can greatly benefit the supply chain industry by keeping detailed and secure records of products being shipped worldwide. This makes it easier to manage recalls if needed, ensuring quick and accurate responses. By automating processes, companies can save time and improve logistics.
Banking and Finance:
Banks and financial institutions can leverage blockchain’s security features to streamline their operations. It helps create automated workflows that can often be slow and expensive. Additionally, blockchain allows for tracking transactions while keeping customer information private.
Securing Intellectual Property:
One of the great advantages of blockchain is that once data is verified, it cannot be changed. This makes protecting intellectual property much more secure, giving patent applicants, and artists peace of mind. For those creating digital collectible art, blockchain can help safeguard their work against copyright issues, especially online.
Cryptocurrencies:
Cryptocurrency uses blockchain as a secure, transparent, and decentralized way to track and record transactions, allowing people to send and receive digital money without needing a middleman, like a bank.
What do experts say about blockchain’s future?
Now that we know what blockchain is and how it works, it is time to consider whether it has a place in the future and see what experts think about it.
According to a survey by MIT Sloan Management Review, 56% of experts who participated believe blockchain is likely to be a sustaining innovation, while 28% disagree and 16% are undecided.
Even though some experts may not see blockchain as a lasting innovation, worldwide investments in the technology has significantly increased. This graph from Research Gate shows a projected increase in global spending on blockchain technology, which is expected to reach approximately $19 billion by 2024. This represents an increase of about 1800% from the initial spending of $0.95 billion.
Blockchain technology, though still in its early stages, is rapidly evolving and holds vast potential across various sectors. As it develops, it prompts important discussions about its implications on international laws, regulatory frameworks, and economic systems.
Engaging with these conversations is crucial. By actively studying and understanding blockchain, we can better grasp how it might reshape industries and daily life. This proactive approach allows us to address concerns and harness blockchain’s potential for innovation, security, and transparency.
Adopting an open mindset and collaborating across disciplines will enable us to contribute to the responsible development of this transformative technology, ensuring it benefits society as a whole.
