Initially, Blockchain technology was just the computer science term for how data is structured and shared. Today, blockchains are hailed as the “fifth evolution” of computing. It’s a new approach to distributed databases. ‘Blockchain for dummies’ is a simple guide to help you discover this evolutionary technology and its several use cases.
Blockchain explanation for dummies
In the simplest term, a blockchain is simply a chain of blocks. Each block can be seen as a page of the ledger or a record book. A block mainly has three elements: data, a hash, and a hash of the previous block.
Now, imagine a complete set of digital ledgers of economic transactions that can be programmed to record and track not only financial transactions but almost anything of value. A blockchain can be used to track medical records, land ownership, and even voting. It’s a shared, transparent, and immutable ledger that records the history of transactions that occurred on the chain. Due to its nature, a blockchain establishes credibility, accountability, and transparency.
Blockchain for dummies: Why do we need blockchain?
Business runs on information. The faster and more accurate the business receives, the better. Blockchain is ideal for providing that information as it provides instant, shared, and completely transparent information stored on an immutable ledger accessible to entire network members. A blockchain network can track orders, payments, accounts, production, and more. Since members share a single view of the truth, you can see all the details of a transaction from start to finish, giving you more confidence, as well as efficiency and time-consuming.
Let’s say that Joe and cousin Alex have a dispute over who owns the furniture store they’ve co-managed for years. Since blockchain uses the ledger method, it must have an entry showing that David first owned the store in 1947. When David sold the store to Mary in 1976, he made a new entry in the ledger, etc. Every change in the store’s ownership was represented by a new entry in the ledger until Alex acquired it from his uncle in 2009. By looking at the history in the ledger, Alex can prove that he is indeed the current owner.
How blockchain approach differs from the old ledger method
The “old-school” ledger method uses a paper document or a database file stored in a single (centralized) system. However, blockchain is decentralized and distributed across a large network of computers. This hierarchy of information reduces the possibility of a data hack.
To settle the dispute between Joe and Alex, they may have hired an attorney or trusted third party to pass the store’s ledger and store ownership documents. They have to trust the third party to keep their financial information and documents confidential.
The problem with third parties and centralized intermediaries like lawyers and banks is that they take an extra step to resolve the dispute, which leads to more time and cost.
If Alex’s ownership data was stored in a blockchain, he would be able to remove the middleman, his lawyer. More specifically, all blocks added to the chain will be verified as true and cannot be tampered with. In other words, the blockchain network and the miners are third-party, making the process faster and more affordable. Alex can show Joe the ownership of his information secured on the blockchain. He will save a lot of money and time by cutting off the intermediaries.
This kind of peer-to-peer interaction with data could revolutionize the way people access, verify data, and transact with each other. Thus, blockchain is a technology rather than a single software, it can be implemented in many different ways.
How blockchain safeguard privacy and control over our data, whilst promoting data transparency
Due to the decentralized nature of the blockchain, all transactions can be transparently viewed by anyone. Each node of a blockchain has its own copy of the chain that is updated as new blocks are validated and added. This means that if you wanted to, you could track all transactions on the network wherever it goes.
Blockchain has the potential to improve supply chains and clinical trials, law enforcement, rights using and strengthening democratic governance through information traceability as a means of assurance that nothing is overly modified. The level of transparency that blockchain offers increases the level of accountability that didn’t exist so far. At the same time, one of the most compelling aspects of blockchain technology is the level of privacy it can provide.
Read more: Token Economy – What everybody ought to know
Blockchain use cases
Blockchain applications go far beyond cryptocurrencies and Bitcoin. With the ability to create more transparency and fairness while saving time and money for businesses, this technology is impacting many different sectors in several ways, from how contracts are enforced to making the government work more efficiently.
In this ‘Blockchain for dummies’ guide, we have compiled 25 examples of blockchain use cases that are implemented in the real world. It’s not an exhaustive list, but they’ve already changed the way we do business:
- Secure sharing of medical data
- Music royalties tracking
- Cross-border payments
- Real-time IoT operating systems
- Personal identity security
- Anti-money laundering tracking system
- Supply chain and logistics monitoring
- Voting mechanism
- Advertising insights
- Original content creation
- Cryptocurrency exchange
- Real-estate processing platform
We hope this ‘Blockchain for dummies’ guide has helped you to understand simply but still fully about blockchain technology. Stay tuned for our next interesting articles!