The public has often heard of a new database that is set to take over traditional systems in business, banking, and even for startup ventures; for this reason, it’s important to ask what is blockchain, and how can it help people? By taking the time to understand this new technology, which is considered to be a game changer, the public will be prepared to utilize it if and when it becomes the mainstream database technology of choice.
It is a Ledger
Blockchains are digital ledgers or spreadsheets that contain information from a variety of sources. It is a secure way of leaving a record of transactions, goods and services rendered, and more. Most importantly, it is a secure database that cannot be tampered with, not even by those who have inputted information into the database. Only when consensus is reached unanimously by all parties can the record be changed, and even then, the change is recorded. The software is also written in a way that double transactions or inputs are not written into the data set and therefore the database is as accurate and complete as possible.
It is Shared Publicly
While not all people are interested in understanding blockchains and many may not even use the technology, it’s important to remember that all of the information is stored and shared publicly through the servers that maintain the entries. Every server sees the transaction data located within the blocks, making it easier to keep tabs on what party inputted data and from where. In some cases, such as the app Provenance, blockchains are used to keep tabs on the origin of products made overseas to help consumers understand the impact of their business has on the environment and labor laws around the world.
It is a Decentralized System
One of the strongest follow-up questions to “what are blockchains” comes in the form of an authority question; who controls the blockchain flow of information? The answer is simple: blockchains are decentralized by design, allowing many parties to input transactions and set rules; again, only by consensus can any record in the database be changed. This goes for the rules that mandate the flow of information through the database as well.
Blockchains Control Information
Blockchains can control information in a way that traditional databases can’t. This is best illustrated by the “hash,” or the ID number that accompanies each block. The hash, which is a set of randomized numbers, sets up the block. Transactions can then be inputted into the blockchain, which follows a chronological order. Finally, parties with the public key can identify the person who transferred the information into the database. This allows blockchains to keep a current and up-to-date listing of transactions from a single entity or a multi-party entity, including points of origins for products, banking transactions, and more.
Digital currencies and databases are growing in usefulness, especially as businesses are being held to account in terms of the provenance of their goods and services. From start-ups and corporations to banks and new currency, answering the question of what is blockchain is the first step to understanding how this new type of database is set to change how the economy will change in the digital age.
