Recently, there has been a great deal of discussion surrounding blockchain’s potential value globally. This might leave many people wondering – what even is blockchain? Sure, you’ve heard the word, but what exactly does it do? How does it work?
Here’s the ‘blockchain, explained’ piece you’ve been looking for.
What is it?
Blockchain is a decentralised ledger technology (DLT) that provides transparency, security, and traceability to customers. It cryptographically secures information and has no single point of failure. That’s one of the primary things that makes blockchain appealing to companies and consumers.
Blockchain is essentially formed of ‘blocks’, which store information about transactions, who is participating in those transactions, and possess a unique hash code that identifies it from other ‘blocks’.
These essentially connect together to create a ‘chain’ (the database).
What makes it different to a traditional database?
The primary difference between blockchain and a traditional database is that blockchain is decentralised.
In a traditional database, all records are stored in one place, and therefore possess a single point of failure if compromised.
On a public blockchain, information is distributed, encrypted, and stored on a variety of devices. Because of this, it is very difficult, if not nearly impossible, to hack.
Private blockchains are the same, except private blockchains restrict who is able to participate in the network, which provides some limitations. Private blockchains are best suited to corporate use of blockchain for internal data, such as fuel tracking, supply chain management, or sensitive information such as patient records in healthcare.
Why is blockchain so effective?
Blockchain’s security, immutability, and decentralised nature are at the centre of its value. There are two types of blockchains: public and private. Private blockchains are ideal for the corporate sector, so that companies can keep control over their own data. Public blockchains, on the other hand, are ideal for the public sector, as anybody can view information on these.
Its security lies in its advanced cryptographic nature, as well as its ability to remove trust. Instead of requiring intermediaries, different partners can use blockchain to ignite trust without doubt. This is because no single person can alter the information on the blockchain or remove it without visibility – therefore it provides a centralised source of trust.
Blockchain platforms are not made equal. Many are constrained to one blockchain protocol. A platform being ‘blockchain agnostic’ means that it can use a variety of blockchains, instead of being constrained to just one.
Many platforms out there are restricted to one blockchain, which could prove disastrous for companies if that chain becomes no longer supported.
Blockchain agnosticism is something that we offer at Blockhead Technologies, because we believe that our clients deserve the right to choose and have control over their own data.
It’s also important to mention that, while blockchain technology has massive potential across various industries, it is unable to solve company issues on its own. Rather, it requires a platform that utilises it in a meaningful way, in combination with other technologies.