Blockchain is a decentralized, peer-to-peer ledger that records financial transactions securely and immutably. This technology has gained the interest of enterprise leaders as well as startups in multiple industries, helping companies move faster while remaining secure.
Blockchains were initially created as a technology designed for cryptocurrency transactions; however, their versatility now extends into personal identity management, supply chain tracking, data sharing and more. Blockchain is revolutionizing how businesses interact with customers, products and operations.
The Blockchain Explained series will cover all aspects of this emerging technology. From how to use it to transfer digital assets and smart contracts securely to how it could transform businesses across a spectrum, we will give you all of the knowledge required to begin adopting it yourself.
Blocks are collections of data that allow you to organize information in chronological order - who, what, when and where. Each block connects chronologically through virtual chains so as to protect its contents from being altered or compromised by third parties.
As each block is added to a blockchain, it is hashed with an unique code so that its addition is public record of what took place and so the network can verify whether or not it belongs in its chain.
Blockchain offers an additional layer of protection from malicious agents who attempt to alter transactions by manipulating each block that came before one they wanted changed - something hackers would find time-consuming and complex.
One disadvantage of blockchains is that any hacker wanting to change information within one block would require infiltrating all computers that contributed, which would require immense amounts of work and likely would only occur rarely.
A blockchain is protected with a consensus algorithm, enabling its entire network to verify the information stored within each block. There are numerous such algorithms, such as Proof of Work (PoW), Practical Byzantine Fault Tolerance and Delegated Proof of Stake that all provide protection from attackers with enough computing power to alter its outcome.
Blockchain remains in its early stages of adoption by organizations worldwide; only 1% of CIOs actively utilize it within their businesses according to Gartner research.
Experts are curious as to when this emerging technology will become widespread. While it offers many businesses viable solutions, it's essential that businesses understand its limitations as well as potential regulatory changes that might impede its expansion.
Example: If regulators were to impose a policy mandating all banks and financial institutions to adopt blockchain technology, this could have lasting impacts on the economy. Furthermore, its potential adoption may be hindered by having to build, maintain, and support an international network of nodes that need supporting. This would make adoption of this technology challenging in an age when budgets are stretched thin and infrastructure limited.