Most of us have at least googled it. Some have even watched a Youtube explainer-video. The really dedicated among us have maybe watched two (a favorite is this one, which explains blockchain repeatedly at different levels of difficulty). Well, here’s one last stab at breaking through to some clarity. Understanding what ‘blockchain’ is means grasping how it works. Take note: this part will be useful when you want it to work for you in your business.
Blockchain technology uses blockchains. Groundbreaking, sure, but it’s nice to have that clarification: a blockchain is not only a concept but a thing. Blockchains store information across a network of personal computers. They’re chains of data, broken into units called blocks. Each of these blocks has a unique ID called a hash. When any new information is added to the block, that hash changes. That’s called forward encryption, and there’s no going back when you use it: every time a hash changes, its visible for everyone to see. This makes the information not just decentralized, but also distributed. That one may be new to you: not many information systems are set up that way. Apps like Uber or Airbnb, for example, are centralized. Here’s a diagram that is helpful for visualizing the difference:
United We Stand (Obviously)
With blockchains, there’s no overlord; no central person or company watching over and controlling the system. Everyone can use it and help run it. This is important because it makes it difficult for any person or organization to take down the network or corrupt it. The computers of blockchain users all store bundles of records submitted by the other members of the blockchain, known as “blocks.” Then, military-grade encryption is used to ensure that these blocks can’t be altered by anyone.
The First Rule of Blockchain is Talk About Blockchain
Blockchain technology fills a glaring need in the identity space. Blockchain will not affect one or two industries, it will affect all industries. So, to all those reading this and silently replacing the word ‘blockchain’ with ‘Bitcoin’: we’re not just talking about banks and finance. In the future, blockchain will be used to efficiently and securely manage and verify online data. We’ll be running our companies through advanced algorithms that help us track the millions of future IoT devices. And we’ll do it all while minimizing administrative cost. Of course, we’ll see businesses out there trying to slow down blockchain’s widespread adoption. Afterall, technological disruption means upheaval of a lot of legacy systems. But in the end, these old-believers will be left in the dust. So, maybe Bitcoin is a bubble. But its technology—blockchain—will change how we do business forever. Right now, we’re only at the beginning of this transformation: we’re standing at the edge of a great canyon of possibility and surveying the horizon ahead.