Blockchain describes a global online database that anyone, anywhere, with an internet connection, can use. Unlike traditional databases, which are owned by central figures like banks and governments: a blockchain doesn’t belong to anyone, and with an entire network looking after it cheating the system by faking document, transactions and other information becomes near impossible.
High profile institutions such as UNICEF and USAID have a different view. They think it can be a force for good, helping the poorest people in the world. Blockchains store information permanently across a network of personal computers. This not only decentralises the information, but distributes it as well.
So, how can an online multipurpose database whose users include criminals work for everyday use? How does it stay relatively hack proof?
The answer is blockchains millions of users. They make it difficult for any one person to take down the network or corrupt it. The many people who run the system use their own personal computers to hold bundles of records submitted by others. The records are known as blocks, each block has a timestamp and a link to a previous block, forming a chronological chain. It’s like a giant Google doc with one key difference, you can view it and add to it, but you can't change the information that’s already there. The blockchain enforces this by using a form of math called cryptography: which means records cannot be counterfeited, or altered by someone else.
Blockchains most famous application is Bitcoin
Bitcoin is a digital currency that is created and held electronically. You can send it to anyone, whether you know them or not. Bitcoin provides a level of anonymity we've not seen in modern times. That’s because unlike credit cards or Paypal payments, there are no mediums such as banks or financial institutions asking for our personal information and home address. Instead people from all over the world move the digital money by validating other people’s Bitcoin transactions. Earning a small fee in the process. Where the blockchain comes in, is verifying the ownership of this digital cash making sure that only one person is claiming it as their own at a time.
Banks and businesses are rushing to adopt blockchain database technology.
In a survey of 308 senior executives at US companies, with $500 million dollars or more in annual revenue, Deloitte found that 28% of respondents had invested $5million dollars or more in blockchain technology. 10% had invested $10 million or more. But, why are they spending so much money: to save money of course. When the study looked into the data f 8 of the largest investment banks it found that blockchain could save them between $8 billion and $12 billion every year.
Blockchains lowers the barrier for entry into the banking industry, and that means fintech startups are popping up in pretty much every market they operate in.
If banks and companies can't keep up, they’re putting their own survival at risk.
For the consumer, the future seems brighter with more security and less cost and better experiences. Yet, blockchain could be the biggest game changer for the poorest in society. The technology is open to people living in low income countries or fragile states at risk of economic collapse. Take a farmer with a small plot of land which is then flooded. The plot of land which is the deed to his land is washed away resulting in the farmer having no proof of ownership of his land. Or if he does have a digital copy on a government database, but it is erased, altered or even destroyed in a political coup. If the farmer had filed that deed on a blockchain, he could’ve avoided all these problems. Along with speeding up the flow of cash, along with having a secure place to keep records, the benefits for the poorest in society are enormous.
From protecting our identities to running autonomous vehicles, to managing a world that is increasingly dependent on the internet of things- the possibilities of the blockchain technology seem endless.
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