Everything You Need to Know About Blockchain Technology

What is Blockchain?

Blockchain is a broad term that describes a decentralized, unchangeable, publicly distributed, and trustless ledger for securing digital transactions. The fundamental technology has been altered and re-theorized many times to fit the needs of independent projects. Not all blockchains are fully decentralized for all users. However, they must not be completely subject to a centralized authority. This is because blockchains allow multiple parties to adjust the records of a digital ledger.

Distributed ledger technology (DLT) is often used in place of the word “blockchain” because of how important it is for users to maintain their own copy of recorded transactions. This enables users (not managers) to establish nodes to validate the records of a blockchain. Distribution also ensures trust and maintains unchangeable records. Many experts argue that a private entity cannot control a blockchain.

Proof Systems

There are several ways that blockchains reach consensus. The first blockchains used Proof-of-Work (PoW) combined with mining for new blocks. However, while extremely secure, PoW is often slow and cumbersome. Proof-of-Stake (PoS) chains broaden blockchain applications. They make for fast, dynamic applications. While an improvement, PoS tends to sacrifice security and limits distribution to witnesses (via voting).

Why was Blockchain Developed

Bitcoin is the original blockchain. It was born out of the financial crisis of 2008. Blockchain developers planned to establish a new financial standard for digital transactions. The objective was to eliminate the possibility of large institutions escaping fiduciary responsibility for their adverse impact upon global economics.

Blockchain Technology is Controversial

A New York Times article looked at the controversy surrounding blockchain technology. The article begins with some of the most promising blockchain applications. This includes the advantages of the characteristics just described, such as, securing against fraud and a new trust model that is free of human error. However, the article’s focus then turns to problems with governance. It challenges the founding principles of current trust models, pointing to community division and project diversion. The article highlights numerous chains that forked from major protocols like Bitcoin and Ethereum.

Adaptability Over Antiquation

It is true that many new projects have forked from major chains. So too is the tendency for disagreement when determining the governance of a chain. Still, we need to remember that blockchain technology is as much about decentralization as anything else. The technology is by no means perfect. Not yet anyway. The fact that it can quickly adapt, rather than simply fade away, echoes its viability as a foundational technology for the new digital age.

Practical Use Cases

Blockchain is being used in practical ways. Consider an article in the business section of CNN. It touts blockchain applications as capable of providing a solution for the global fishing industry. Reports by the Environmental Justice Foundation found that more than 31% of catches are illegal. Blockchain offers the potential for unparalleled traceability. For dangerous business operations in the open seas, this could transform the industry. Similar applications can be expected for ocean transport, the trucking industry and even aviation. Virtually anywhere that logistics and tracking are critical to business operations, blockchain will likely become crucial to remaining competitive.

Mainstream Adoption

Both Facebook and Google are mentioned in a Forbes article. The Libra project that was instituted by Facebook is the subject of many headlines. Governmental regulators have expressed grave concerns. Google is in a similar situation. However, instead of creating a blockchain application from the ground up like Facebook, Forbes reported that Google partnered with Chainlink. Several large companies are active in this space. Both IBM and Amazon have already begun marketing their own blockchain products.

Conclusion

It is pretty clear that future digital technologies will be based on blockchain. The world will become more decentralized and people will gain greater control over their information. Even large established businesses are coming to grips with the fact that they must employ some aspect of decentralization. While the difference between Bitcoin and Facebook’s projects are immense, both efforts are not under a single authority that can change data protocols on a whim.

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About the author: Wifred Murray

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