If you've been paying attention in the news for quite some time, you likely have heard of Bitcoin and its potential as a new currency in the market. Interestingly, a lot of people who invest in Bitcoin also mention something like blockchain. Apparently this technology is the "foundation" of other things such as Bitcoin. And as though the concept of Bitcoin is not confusing enough, apparently blockchain computing can be "applied" to other industries as well? Just how does this work?
Just What is Blockchain?
It might help to begin your journey into using blockchain by first understanding what blockchain computing is. Yotta Laboratories is just one of many institutions beginning to adopt blockchain in their available services - but is this for you? Here are a few things you need to know about blockchain for starters.
In essence, a blockchain is a platform designed to provide a means for a group of people to create "transactions" over a digital ledger that doesn't require a centralized system, but at the same time remains secure and private as everyone can see what everyone plans on changing, and have to agree for transactions to be legitimized.
A Real Life Basis: Try Wikipedia Or Google Docs
If that concept is still a bit tricky to wrap your head around, try thinking of blockchain as something like Wikipedia or Google Docs.
Using blockchain, members of the blockchain can actually write entries into a digital ledger (the chain) with the same members controlling just how the ledger is updated or amended. This is the same as to how entries in Wikipedia aren't exactly from a "single" publisher, given no one actually "controls" all the information available.
- This is because unlike "overwriting" transaction data, every transaction in the ledger is recorded. Similarly, with Google Docs and Wikipedia, each change in pages and documents are actually recorded into the system for everyone to see.
- Perhaps the only difference in terms of both Google Docs and Wikipedia versus blockchains is that users of both Google Docs and Wikipedia have to be granted permissions first by the administrators before being able to access and modify pages. Whereas in blockchain, everyone actually "gets" to have that "authority" through the verification of transactions.
The Technology Behind Blockchain
What perhaps makes blockchain so attractive is that it represents an entirely new age of registering and distributing information that essentially eliminates the need for "centralized" parties to facilitation transactions, which is why companies such as Yotta Laboratories have invested in bitcoin. Interestingly, blockchain isn't really "new," but is rather a combination of technologies that are proven to work in their own respective ways. When Satoshi Nakamoto's bitcoin was introduced to the market, the idea actually had potential that its principles were applied into dozens of other means as well, which is why we have bitcoin now. The technologies involve include:
- P2P network for membership within the blockchain: The lack of a centralized authority to "control" the blockchain essentially puts the blockchain under the control of its members. This is actually extremely useful, as no one person "owns" the blockchain and everything under it. When your blockchain is a program pertaining to other industries, having the entire team control the chain is a good way of ensuring transparency and security.
- Programming the blockchain itself, or the platform where it works: When people want to introduce new changes into the blockchain, it's essentially introducing a new transaction throughout the entire blockchain. This means, once approved, all members of the blockchain will see this "change" in their own digital ledgers. This programming of the blockchain allows it to be transparent, and at the same time can't have anyone manipulate data since "permissions" are needed to add transactions.
- Private key cryptography for verifying transactions: Transactions are actually verified when it comes to blockchain, mostly because of trust. When parties in the digital world have to build relationships, digital trust now becomes an integral part of the issue - as authentication and authorization are real deal breakers with the efficiency of blockchain. Authentication via blockchain is represented by a private key that only users of the blockchain possess, and this authorizes them to be able to do a broad range of things with their authenticity - such as broadcasting right transactions or having enough of the digital currency. A stable cryptographic system is used by making sure members of the chain "approve" of transactions before they push through. How, though?
Blockchain Cryptography: The Basics
When it comes to blockchain "relationships," it's important to remember that members of the chain actually have two keys - a private key and the public key. These create a digital "signature" as their combination requires a particular degree of effort to authenticate, which in turn creates a strong ownership on your end. How these elements interact make blockchain shine:
- A distributed network ensures everyone is aware of what's happening to the digital ledger. "Validators" use mathematical verification to reach a consensus that they're seeing the same transactional request, and members of the chain contribute processing power to do it. This is the same way as a group of cameras seeing something happen inside the room. Of course, this also means the network size is integral to the network's security.
- Bitcoin has skyrocketed into popularity, because a huge network has contributed massive computing power for Bitcoin verification. Verification, in the case of blockchain, starts when User A announces a change into its private key and latches it to the public key of User B, where it's going to be spread in the system.
- A blockchain then starts verifying the change using a special protocol. A block is broadcasted into the network, and consists of relevant information, timestamp, and digital signature. Verification of the block is done with mining, where people offer their computers' processing power to verify the transaction. People don't exactly do this for free, though. Mining was created in order to use something called the tragedy of the commons, where a reward is presented to people who actually actively participate in the mining process. Through this process, a history of what's happened to chains are recorded in each of the members' systems.
The Bottomline: Blockchain Can Be The Next Step To Business Success
With the above taken into consideration, it might strike anyone as odd to actually rely on such new technology as blockchain for their needs. However, with the aforementioned information taken into account, it may actually be extremely helpful to a lot of industries to adopt blockchain methodologies into their business processes. Hopefully the above explanation could give you a much better clue as to just how blockchain can contribute to your company's efforts in your niche, or how you might be able to apply it in some form or fashion for your professional needs.
John Cavanaugh is an avid fan of modern tech, especially those concerning programming and coding. As a writer and contributor for sites such as Yotta Laboratories, John strives to ensure his readers always have the best kind of information available whenever he discusses concepts and topics concerning modern advancements in tech.