A blockchain is essentially a global database that has four important characteristics
Blockchains store a data set’s "digital fingerprint" within a block. These digital fingerprints are added in chronological order and cannot be altered at a later time. Participants in the network then help to verify the data following a set of rules as the data itself is cryptographically held.
These participants are independent, are distributed around the world so not centralised in one location or by one organisation. Each block of data is mathematically linked together to form a chain of blocks (hence a Blockchain) and data on the block represents a consensus of the history of events that has occurred. The data on the Blockchain is publicly available for verification by any 3rd party.
Initially Blockchain was used to record the transactions of a digital currency called Bitcoins which in 2008 was launched by someone call Satoshi Nakamoto. In the wake of the financial crash, wanted to have a way to enable a peer to peer version of electronic cash without the need for financial institutions like banks or exchanges.
Blockchain can be used to create and store information, which then allows people any where in the world at any time, to inspect the information, look at the data to verify a transaction and or to use the information knowing that it is accurate and correct. While many financial services organisations are adopting Blockchain, it can be used by almost any organisation:
Some examples of firms that have been established using Blockchain are:
Blockchain is a global data base of information that is very secure. This enables peer to peer transactions without the need for a third party, thereby significantly reducing costs and creating an online real-time transaction history. In theory an organisation would know immediately what it has bought and sold. For example, it could be possible produce a daily Profit and Loss statement, along with a balance sheet, stock check, debtors and creditors lists etc at no additional cost. Since a record of every transaction is kept on the Blockchain, it creates a much more open transparent record, reducing the chance of fraud and removing the need to have a third party to verify and check the information.
Blockchain could be a really useful tool for those organisation which need to check people's identities in transactions i.e. how can we be certain you are who you say you are e.g. in the field of money laundering or when buying or selling land, property, shares, cars etc.
One of the issues Blockchain faces is due to its historical links with Bit coins, on account of the initial users of Bit coins being considered by some some to be “shady” i.e. organisations that used the dark web, money launderers, drugs and gun dealers.Therefore, Blockchain’s reputationin some eyes has been tarnished.
A bigger challenges is,that since Blockchain has the ability to cross legal borders, there is very little consensus in terms of the regulation or agreement on standards etc. As a result of Blockchain removing the need for central banks and their parties ie stock exchanges, governments are nervous about this technology and how to regulate, it despite seeing the clear advantages it brings.
Depending on how the Blockchain is established the speed at which information is processed can be an issue but there are a number of initiatives being worked on that will address this challenge.
By teamblockchain On Thursday, February 16 th, 2017 · no Comments · In Blockchain basics