Blockchain technology has been called the most significant technological advance of the 21st century – revolutionizing the digital world as we know it, dubbed “Internet 3.0” for its potentially equally large impact.
And even though the term “Blockchain” and associated use in the field of cryptocurrencies is known by everybody, it is doubtful that everybody knows what it is. So, let’s tap into what it is, what it does and why that is such a revolutionary thing.
A chain of blocks
For starters: The blockchain is called blockchain because it is a chain of blocks, simply put.
Information is saved in the form of blocks, based on the fact that it consists out of three data points:
Firstly, the data the block is intended to record, be it the transaction of one token from person A to person B or collecting a poll’s votes – including a time stamp from the occasion where the transaction was recorded.
Furthermore, the block contains a unique identifying signature linked to the account that has made the recording, making it possible to anonymously link singular users’ transactions together. While those identities remain completely private, transactions are open to be viewed by anyone at any time.
Lastly and most importantly the block contains a so called hash – a unique identifying link to the previous block of the chain, somewhat like a digital fingerprint in the sense that there are no two alike in the world. Since this hash is dependent on the data of previous blocks, it is not possible to alter or even fake a block’s data without needing to change all following blocks too.
Decentralized, transparent, recorded
The combination of this linking and the datapoints contained in each block is what makes projects using blockchain so trustworthy and reliable: As soon as the transaction, vote or whatever other record has been recorded by the block, it can’t be tempered with anymore. After all, you would have to change every following block, which can’t go unnoticed by the other participants of the network.
This is due to the fact that project-data is decentralized and works on a peer to peer network. Rather than existing on one single server or computer, copies of the same data are located on multiple devices in various locations – so called nodes.
As a result that data can never be damaged or lost: Should one point of storage be altered, damage or lost, the other copies are still secure and will proof the correctness or wrongness of the data.
Where does it come from?
Blockchain technology was first mentioned in a whitepaper in 2008 by a man called Satoshi Nakamoto, but he might as well be a woman or a group of people, since the true identity of this revolutionary coder is unknown and a mystery within the community, with nobody truly knowing who he or she is.
While it is worth noting that he did not build every aspect of the blockchain himself but combined several existing technologies, in doing so he might have revolutionized several fields. Social networks, voting systems or financial services have the potential to forever be changed as visible on the examples of Bitcoin, Ethereum, Ripple or many others. All of this, possible using blockchain technology – the “Internet 3.0”.