Before it completely changes the world around you, you need to better understand blockchain technology, what it is, and why it matters.
Blockchain technology is essentially a digital, decentralized public ledger that will transform the world as we know it in many ways. And you will be forgiven for thinking this was nothing more than hype, as there seem to be so many transformative types of technology in the market these days.
However, blockchain, its emergence, evolution, and how it works, not to mention its verification, transparency, and security, is crucial to our future. You could argue this is mostly due to our shift to a digital or more digitized environment, as everything is data-oriented now. But, that doesn’t take away the importance of the technology.
To understand why it’s so influential you must first understand what it is.
What is blockchain
As mentioned, blockchain technology is a forward-facing, decentralized digital ledger that keeps a record of all transactions in the network and acts as a facilitator for common exchanges. It was originally developed for cryptocurrencies like Bitcoin. Not long after it’s creation, however, people began realizing its full potential, coming up with a multitude of ideas for employing the technology.
It’s being used in the modern supply chain to improve transparency of product sourcing and shipments, for example. It may also soon be used in the energy and resource industry to decentralize power distribution.
Blockchain is, at its very core, a public network. All transactions are broadcast on an open peer-to-peer network which validates parties involved and verifies the data exchanging hands. When the transaction is completed, it is then added to the existing blockchain or network. In this way, there is always a public, permanent, and unalterable record of that transaction. These blocks or nodes essentially form one long chain, which is where the name “blockchain” originates.
The information tracked and recorded is secure because no one person or group can alter what’s sent to the network. Instead, it’s handled via the system natively, and cannot be influenced by outside means. Furthermore, the data collected tells you nothing of the parties involved—if you don’t want it to—nor anything else. You can also see what’s been transferred and how much. This alien combination of security and public transparency makes for a great system that is incredibly lucrative in many situations.
Food distributors and retailers, for instance, could use blockchain to track a contaminated stream of goods, saving consumers from the dangers of a foodborne illness outbreak.
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Permissioned versus unpermissioned
There are two forms of blockchain systems available: permissioned and unpermissioned. The difference is actually quite simple to understand.
Unpermissioned blockchains use an open distributed ledger system that allows anyone to join the network, participate, and view transaction records.
Permissioned blockchains, on the other hand, work the same way except it’s possible to restrict who can authorize transactions on the network.
This would mean confining the transaction history and participation to a select group, such as approved real estate agents or financial lenders in the real estate industry. In this scenario, the blockchain would be used to carry out real estate transactions, monitor exchanges, and modernize the industry. But it would also mean only viable parties can interact with the actual public ledger, which in the case of home sales would be incredibly important.
Why is blockchain so promising
For starters, everything that happens or occurs on the network—or blockchain—is verified, accurate, and unalterable. That means at any given time you can review the network, including past transactions to extract valuable information.
Since it is decentralized—the entire process is handled by the peer-to-peer and public network—no single entity or group is in charge. This also means that the concern for contamination or corruption is eliminated.
Finally, it’s spread across a vast network, and the data is collectively stored—and must also be collectively updated—so there is no single point of failure or contention. It’s seemingly endless and always-on, continuously recording, evolving, and growing.
Many industries, organizations, and information streams will benefit from a transparent and trustworthy source, which is exactly why blockchain is so important to modern platforms.
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