© Shutterstock / Alexey Godzenko

Blockchain Technology

Perhaps some have never heard of Blockchain Technology. Or maybe even though some have it isn’t clear to them, and they may benefit from a little revisit?

In 2008, an individual or group of individuals, adopting the pseudonymous handle of Satoshi Nakamoto created Bitcoin and introduced the Blockchain technology. The Blockchain is positioned to be a transactional ledger for Bitcoin cryptocurrency. It put an end to the double-spend issue that had plagued other attempts at a cryptocurrency. Double-spend refers to the digital currency being spent twice.

Think of the Blockchain as an electronic ledger of records. Each group of records or transactions constitutes a “block” and chronologically combines with the block before it and after it to form a “blockchain.” Each block contains information – a cryptographic hash – from the last block of information—I.E. timestamp, and batched transactions that are incredibly secure and tamper-resistant. “Block Time” is the amount of time it takes to generate an extra block for the Blockchain, and by the time this block finishes completion, the data becomes verifiable. Some blockchains can generate new blocks in as little as five seconds. However, Bitcoin takes approximately ten seconds per block. Bitcoin is also the most popular Blockchain in the whole crypto ecosystem.

A network of peer-to-peer computer nodes supports the Bitcoin Blockchain. These nodes consist of people worldwide running a computer (client) connected to the whole blockchain network. Each client is required first to download a copy of every transaction added to the blockchain. As new transactions become verified, added to blocks, and accepted on the Bitcoin Blockchain, they also become part of each client’s database. A subset of these nodes is “mining nodes,” They are capable of validating each transaction. When, and if successful at being the first to validate, they are rewarded in bitcoin. This serves as an incentive for their work in securing the network. Their work is known as “proof of work,” It is a “consensus algorithm” that ensures that the blockchain’s shared consensus is achieved. Proof of work is the consensus algorithm used on the Bitcoin network. However, other cryptocurrency blockchains use various consensus algorithms such as proof-of-stake, proof-of-importance, and delegated proof-of-stake.

Decentralization

The whole concept of decentralization of blockchain technology is manifest in the peer-to-peer nodes. Anyone around the globe is welcome to share the responsibility of validating transactions and sending blocks to the Blockchain. All the transaction data on the entire Blockchain is kept as a database on each peer’s computer, I.E., one entity alone does not centrally hold it. This fact makes it even more difficult for a hacker to corrupt the database. Blockchains are transparent, meaning anyone has access to the transactions stored and can easily be verified by others because they all have the same access to the information. Data on the Blockchain can essentially be regarded as incorruptible. Because altering any transaction would demand enormous amounts of computing power and substantial funding costs to make any alterations on the entire network. 

The attributes that Blockchain Technology possess offers promising opportunities in various areas. Of course, the most popular use-case at the present time is in the field of cryptocurrency. Although, several other applications where Blockchain Technology could be utilized are:

  • Supply Chain Management
  • Digital Identity
  • Voting
  • Healthcare
  • Sharing Economy

Various Types of Blockchains

Blockchains fall into three categories: Public Blockchains, Private Blockchains, and Consortium Blockchains.

  • Public Blockchains – Being public means this type of Blockchain has no restrictions. Meaning anyone can access the network as long as they have a device to access the internet. They can then actualize transactions and even be validators on the network. Two of the larger and most popular Public Blockchains existing at the moment are Bitcoin and Ethereum.
  • Private Blockchains Because they are permissioned, this type of Blockchain is different than a Public Blockchain. Access to a Private Blockchain is required by invitation only from a current member. Private Blockchains are considered “middle-ground” for companies with enterprises that are not comfortable with the lack of centralization and control inherent in public blockchains.
  • Consortium Blockchains – Consortium Blockchains are permissioned the same as Private Blockchains, and they have similar attributes. They are often viewed as semi-private. Consortium Blockchains are under the control of several companies instead of just one. Administrators of these Consortium Blockchains have the power to decide how many nodes can run the consensus algorithm and restrict participants’ rights on the chain.

Blockchain Use-Cases that removes the middleman:

Blockchain’s decentralized nature removes the need for intermediaries, which has clear implications in various areas such as:

Distributed Cloud Storage
Improvement in data security due to a shift from centralized to decentralized for storage of Data.

Sharing Economy
Blockchain’s peer-to-peer and decentralized nature dissolves the need for centralized entities such as Airbnb and Uber to make decisions in sharing business/economy.

Music
Music artists can remove middlemen such as labels and publishers, and instead sell their music directly to their fans. Blockchain-based cryptocurrencies such as Bitcoin and Etherum support micropayments. This could enhance these novel artist-fan relationships.

Smart Contracts
Blockchain-based self-executing smart contracts with predefined rules could facilitate agreements between various parties, all without a middleman’s need.

More blockchain use-cases

Charity
Blockchains can provide a transparent and auditable trail for all to see clearly, to prevent fraudulent activity.

Automobiles
Blockchain-enabled supply chain management could prove useful in detailing a car’s history from the “new” sale to the junkyard

Real Estate
Transfer land titles can be digitized on the Blockchain, and this would facilitate a more efficient and transparent payment transaction process.

Internet of Things
All data from the Internet of Things can be stored on the decentralized Blockchain instead of a controlling centralized entity.

Cyber Security
Blockchains are secure by nature and virtually tamper-proof. This makes it ideal for fighting cyber-security and its threats.

Insurance
Blockchain-based smart contracts can create transactions for better clarity and more secure agreements between insurers and clients.

As time moves on, Blockchains will continue to change our lives positively. More and more use-cases will come about making our lives simpler, more cost-efficient, and much more convenient.

*photo courtesy of © Shutterstock / Alexey Godzenko

About the author

Gail holds one of the most challenging role in the Compumatrix Leadership: Membership. She ensures that that members and potential members enjoy the benefits of being part of the Compumatrix community.

Comments

  1. great information Gail — and it is amazing how much Blockchain can be made to secure so many different parts of our existence or any type of actual business — it fascinates me when I see the security features and start to think on how this or that would affect the business — just a great read thank you —

  2. Thanks Gail (Sophye?) for another excellent description of the blockchain concept. You are the Oracle! The Bitcoin Blockchain is a piece of pure genius in the way it prevents the “double spend”. The 5/10 second pause allows the blockchain to verify the sources of each transaction before the block is added to the blockchain.If you try to put 2 transactions into the system using the same Bitcoin, it could end up in one potential block, & be immediately rejected; OR your 2 transactions end up in 2 potential blocks – whichever block is accepted first will ensure that the other potential block containing the second potential transaction, will be rejected because the Bitcoin you held has already been spent.

  3. The Blockchain technology is nothing more than a very complicated ledger of records. The uses of the Blockchain far exceed Bitcoin, as it now being used in science, self driving cars, the financial world the medical profession and much more. It has been said the blockchain discovery is akin to the discovery of Einstein’s Theory of Relativity.

  4. What a fabulous post, Gail! Thank you so much for detailing this subject that to me is the whole point of Blockchain/Bitcoin and the much needed shift in our economic infrastructure. As I imagine what a world looks like with the above mentioned ideas in place, and then some, I am giddy with joy!!!

  5. Thank you for that excellent definition and information about blockchain technology. I never
    realized how many uses there are for this technology, and I think probably many more to be added on to the list in the future. When used in charities the prevention of fraudulent activity is a huge benefit, as sadly there definitely are places that do lose touch of the aspect of helping people and greed takes over. Another post for my “compumatrix text book”

  6. Hello Gail! I confess that I still don’t understand blockchain very well. But with reading your blog it became clearer to me! I know that we need to understand a LOT of cryptocurrencies for our businesses at COMPUMATRIX to become promising and to be successful. I look forward to the moment when everything starts. Hugs!

  7. had to come back and read and learn more on the BTC and also how Compumatrix fits into the overall scope — i am learning from the reading and research just how cryptocurrencies and also everyday currencies all fit into each moment of each day — do not have all the answers but am learning — thank you again Gail —

  8. I never realized how many uses there are for this technology, and I think probably many more to be added onto the list in the future. When used in charities the prevention of fraudulent activity is a huge benefit, as sadly there definitely are places that do lose touch of the aspect of helping people and greed takes over. Another post for my “compumatrix text book” Thank you for that excellent definition and information about blockchain technology.

  9. It’s amazing what blockchain can do and how it has changed so many aspects for not only the cryptocurrency but also used privately today in many companies. Blockchain is the technology that enables the existence of cryptocurrency (among other things). Having a decentralized ledger of all transactions across a peer-to-peer network..
    It’s mind-boggling and I am glad that I don’t need to know all the details in order to use Bitcoin or any other crypto. Just knowing that it works and it is safer this way, is enough for me.

  10. Gail thanks for a very detailed account of Blockchain. I have been very excited to read about Blockchain recently when discussing the upcoming Presidential election. Having this as a way of voting would be very beneficial and without fraud. The news discusses having duplicate voting and that would not be good for many, many reasons. Blockchain is so very interesting.

  11. “The Blockchain as an electronic ledger of records. ” That’s really the simple and short of it. Just stored information that can’t be altered. Ethereum has it’s own blockchian as well as Bitcoin and countless other systems have their own. I think it’s cool that Walmart even uses their own blockchain to track their shipments and find out where things are going wrong or breaking down along the line.

  12. Blockchain is the best thing since sliced bread and many businesses are using it now and it works very well. I like the way you listed all the different ways and companies that are using the blockchain today. I always learn something I did not know when I read your blogs for instance the different types of blockchains was very interesting to say the least you are very thorough in your information.

  13. I agree, Tim…the use cases of the blockchain will grow and I’m sure there are many applications not even discovered yet that can be utilized. I love good technology! It is like Christmas every morning! And Thank you!! I’m really pleased the blogs are helping you to pick up some info here and there.

  14. The blockchain already regulates so many fields. The decentralized blockchain is a friend of the world. From what I understand, the blockchain will be the catalyst to propel us into the twenty-first century. It will be opening avenues for all manner of unknown concepts. It is exciting to be learning about the means that will change our lives forever. Thank you, Gail, we thank you for your service and your faithful distribution of this acquired knowledge.

  15. Thank you Gail for the awesome blog, I cant wait to see all the new businesses using blockchain its growing and so are we. I love the break down it makes it easy to visualize. We will have so much to teach. Exciting days ahead.

  16. I appreciate your excellent summary of the blockchain. I took the Certified Blockchain Expert certification and it was not as concise and clear as your article. I have to keep pinching myself that we are at the beginning of the blockchain technology. What is unfolding is going to be bigger than we could have ever imagined.

  17. I would really like to see a public blockchain utilized in the government. Many would agree it is very time consuming to try and accomplish anything in our local government attempting to have them look up records. By having legal documents such as home titles, important documents and corporation filings on blockchain, this could speed up document recovery. It could also reduce headcount to do research on these documents to be found.

  18. That’s a great post Sophye an education regards Blockchain . Have been impressed how it prevented double spend. The number of applications is increasing every day and is going to be a huge task to keep track of it.I heard that BTC is trying to reduce the block time by introducing another protocol.time will tell.It is a phenomenal invention that I feel will benefit us all the mankind in a tremendously way

  19. so many great uses of the technology blockchain and thru time I have a feeling this type of tech will get utilized in so many different and even right now unknown businesses and really would be good in govt. also it would cut back on cost to any business once implemented — and lower cost govt. can’t be all bad lol

  20. Blockchain and technology are not part of my strongest knowledge. Your blog sophye makes them a little easier to understand. You write many blogs with useful content, and I’m so grateful I can go to the blog area and read them. I am also grateful for all the work that You, Management, Staff etcetera put into making us members better understand

  21. All I can say is that there is a lot of very good and useful information here. While I understand the basic concept of Blockchain technology and it’s the purpose of decentralization, I personally feel like one can get a little bit too far into the details to the point where things can get very fuzzy very quickly. The basic concept is one thing, but at some point, at least for me, the learning process must slow down dramatically in order to understand and retain what I am learning. I am definitely at that place. I keep telling myself that I am going to be really smart on this subject someday.

  22. Thank you Gail  for a very informative blog about blockchain technology.It is time to understand blockchain technology, In this blog I learn various  types of blockchain technology,which I didn’t know before,blockchain technology is a vast subject and we must learn about new technology for future.It is now being used in almost every sector to prevent fraud.  I am confident compumatrix is a very good blockchain technology company for us.

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