What is Blockchain?

The technology that will make an impact in few decades has arrived. It is not social media, artificial intelligence, robotics neither super computers. It is the underlying technology of digital currency like Bitcoin. It is called Blockchain, “the next generation of Internet”.

Before I jump into Blockchain, all of you must be familiar with Ledger. So what is Ledger? Every business has a variety of expenses and ways of earning income, just as you have different bills to pay and different income streams. Like you, a business may have utility bills, rent expenses, and vehicle repair costs, while its income may come from different places, such as sales, interest from bank accounts, loans, or from selling items that the company owns. You might record these events as they occur in your life in your check register. For a business, all of these financial events, or transactions, must be recorded in their financial books. Each of the transactions with small or big amount is a ledger.

Now, let’s get a bit deeper. Suppose if two employees of a company have to collaborate to make changes in the ledger, Employee X sends the file to Employee Y and ask him/her to make revisions to it. The problem with that scenario is that Mr X need to wait until receiving a return copy from Mr Y before he can see or make other changes because he is locked out of editing it until Mr Y is done with it. That’s how databases work today. Two people can’t be messing with the same record at once. That’s how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again).

Now you may say, with Google Docs (or Google Sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. YES, It is like a shared ledger, but it is a shared document. The Google Docs file also automatically keeps a clean record of who contributed changes, what the changes were, and when they were made, tracing back to genesis or say beginning of the file. How is this possible? Because the Google Doc has a digital address that is native to the cloud, not one native to your local hard drive.

Please listen carefully, ‘Google docs is to Microsoft Word what Blockchain is to a traditional ledger system”. I repeat again, “Google docs is to Microsoft Word what Blockchain is to a traditional ledger system”.

Let us get deep into Blockchain:

As you all are aware, in 2008 we had a financial crisis. Deliberately or unplanned, an anonymous person or a group of people in the name of Satoshi Nakamoto published a paper or Bitcoin protocol in November 2008, after Financial crisis. This crypto currency Bitcoin enabled people to trust and do transact peer to peer without the third party or the middlemen. This brought Bitcoin into spotlight. But let us forget about Bitcoin for now and look at the underlying technology ‘Blockchain’.

Blockchain technology is a decentralised database that stores a registry of assets and transactions across the peer-to-peer network. Basically it’s the public registry of who owns what and who transacts what. The transactions are secured through cryptography and over time that transactions history gets locked in blocks of data that are then cryptographically linked together and secured. This creates an immutable unforgeable record of all transactions across this network. This record is replicated on every computer that uses this record.

To make it clear, you can compare it with Wikipedia. You can see everything and the contents been updated by anyone. You can also track those changes made. On Wikipedia, it’s an open platform that stores words, images and the changes of data over time. On the Blockchain, you can think of it as an open infrastructure that stores many kinds of assets. It stores the history of custodianship, ownership and location for digital currency like Bitcoin, other digital assets like title of land, could be certificate, contracts or even personal information.

How many of you know how the Internet works but you use it everyday? So will be the Blockchain.

Source:

• CloudTech, Pat McCool, 33 January 2017, Building the Blockchain of success: How cloud is at the heart of it
• Bettina Warburg, Dec 8, 2016, How the Blockchain will radically transform the economy, Tedtalks
• Don Tapscott, Sep 16, 2016, How the Blockchain is changing money and business, Tedtalks