What is Blockchain Technology
Blockchain technology offers a way for untrusted parties to reach consensus on a common digital history. A common digital history is important because digital assets and transactions are in theory easily faked and/or duplicated. Blockchain technology solves this problem without using a trusted intermediary.
Blockchain technology is a structure that stores transactional records, also known as the block, of the public in several databases, known as the “chain,” in a network connected through peer-to-peer nodes. Typically, this storage is referred to as a ‘digital ledger.’
Every transaction in this ledger is authorized by the digital signature of the owner, which authenticates the transaction and safeguards it from tampering. Hence, the information the digital ledger contains is highly secure.
In simpler words, the digital ledger is like a Google spreadsheet shared among numerous computers in a network, in which, the transactional records are stored based on actual purchases. The fascinating angle is that anybody can see the data, but they can’t corrupt it.
Types of Blockchain Technology
There are four types of blockchains:
1. Public Blockchains
Public blockchains are open, decentralized networks of computers accessible to anyone wanting to request or validate a transaction (check for accuracy). Those (miners) who validate transactions receive rewards.
Public blockchains use proof-of-work or proof-of-stake consensus mechanisms (discussed later). Two common examples of public blockchains include the Bitcoin and Ethereum (ETH) blockchains.
2. Private Blockchains
Private blockchains are not open, they have access restrictions. People who want to join require permission from the system administrator. They are typically governed by one entity, meaning they’re centralized. For example, Hyperledger is a private, permissioned blockchain.
3. Hybrid Blockchains or Consortiums
Consortium’s are a combination of public and private blockchains and contain centralized and decentralized features. For example, Energy Web Foundation, Dragonchain, and R3.
Take note: There isn’t a 100 percent consensus on whether these are different terms. Some make a distinction between the two, while others consider them the same thing.
A sidechain is a blockchain running parallel to the main chain. It allows users to move digital assets between two different blockchains and improves scalability and efficiency. An example of a sidechain is the Liquid Network.
What Are the Implications of Blockchain Technology?
Blockchain technology has made a great impact on society, including:
- Bitcoin, Blockchain’s prime application and the whole reason the technology was developed in the first place, has helped many people through financial services such as digital wallets. It has provided microloans and allowed micro payments to people in less than ideal economic circumstances, thereby introducing new life in the world economy.
- The next major impact is in the concept of TRUST, especially within the sphere of international transactions. Previously, lawyers were hired to bridge the trust gap between two different parties, but it consumed extra time and money. But the introduction of Cryptocurrency has radically changed the trust equation. Many organizations are located in areas where resources are scarce, and corruption is widespread. In such cases, Blockchain renders a significant advantage to these affected people and organizations, allowing them to escape the tricks of unreliable third-party intermediaries.
- In the area of politics, Blockchain is being looked at by an organization called follow my vote, which is trying to combat election fraud at the ballot box.
- The advent of the Internet of Things has unleashed a plethora of smart machines that transfer data over the Internet without any human interaction needed. Likewise, technology is even used for public services such as rubbish collection, transportation, and traffic management. So, in the world of IoT, you can make Smart contracts and allow smart objects to perform the listed tasks, which in turn negates the need for human involvement.
- Blockchain technology can create a decentralized peer-to-peer network for organizations or apps like Airbnb and Uber. It allows people to pay for things like toll fees, parking, etc.
- Blockchain technology can be used as a secure platform for the healthcare industry for the purposes of storing sensitive patient data. Health-related organizations can create a centralized database with the technology and share the information with only the appropriately authorized people.
Blockchain: A New Weapon in Cybersecurity
Cybercrime is such a vast and burgeoning underworld industry that it prompted Ginni Rometty, Chairman, President and CEO of IBM, to declare that “cybercrime by definition is the greatest threat to every industry, every profession, every company in the world”.
Both dangerous and costly, cybercrime costs individuals and businesses an estimated $500 billion a year. Our current security protocols simply cannot keep up with the relentless and clever attacks, especially when they’re seemingly so simple (i.e., a phishing email to a credentialed employee can expose the data of millions).
Blockchain, a Distributed Ledger Technology (DLT), is focused on creating trust in an untrusting ecosystem, making it a potentially strong cybersecurity technology.
The ledger system is decentralized, but information is transparently available to members of the specific blockchain. All members (or nodes) can record, pass along and view any transactional data that is encrypted onto their blockchain.
This process creates trust while also maintaining a high level of data integrity. In essence, the distributed nature of blockchain provides no ‘ hackable’ entrance or point of failure that detrimentally exposes entire datasets.The cybersecurity industry can benefit from blockchain’s unique features, which create a virtually impenetrable wall between a hacker and your information.
The transparent ledger allows for password-free entry. Using biometrics, including retina scans and fingerprints, the ledger can create a single-source, uncrackable form of entry into any private data.
Decentralized storage ensures that each block contains only a small informational piece to a much larger puzzle, limiting hackable data to almost nothing.
Finally, blockchain’s public record keeping system gives each node an insight into any data manipulation, exposing potential cyber crime attempts in real-time.
Blockchain in cybersecurity is widespread, and we’ve rounded up six industries that use it as a new weapon in the fight to protect our most sensitive information.
Blockchains can be set up to operate in a variety of ways, using different mechanisms to secure a consensus on transactions, seen only by authorized users, and denied to everyone else. Bitcoin is the most well-known example that shows how huge Blockchain Technology has become. Blockchain founders are also trying out numerous other applications to expand Blockchain’s level of technology and influence. Judging by its success and increased use, it seems that Blockchain is poised to rule the digital world of the near future.