What is Blockchain?

The early days of digital computing brought the reality of infinitely copyable data into the world. Indeed, there are some who contend the most popular and most powerful feature of the digital computer is the ability to copy data from one document and paste it into another. During this time of unprecedented growth, expansion and economic activity, answers to the alternative question were being sought. Is there a way to make data uncopyable? Could a piece of digital information become unique? The discovery of uncopyable data took place in 2008 with the invention of the blockchain.

Authentic

There are two key characteristics in this technology. The first is something called serialized encryption. Each “link” is encrypted, and each of those links is tied to the previous link with a similar encryption. This means it is practically impossible to “unravel” a chain in order to alter the data stored in a single link without rewriting the entire set of records.

Due to the nature of modern encryption technology, the physical electronics required to perform such a task is beyond any one person or company’s means and will be for some time.

Distributed

The second major feature of this technology is its distributed nature. Every system on a network that participates in transactions that are recorded in a chain has a copy of the “ledger” or the data records contained in that chain. This means every system on the network can “validate” the data in the event of a discrepancy. This makes the system very resilient and immediately useful in finance. Distributed records combined with serialized encryption makes it nearly impossible to alter or even copy the information stored in a distributed record.

Unique

Once you have established a digital ledger where encryption and distributed storage can ensure no data can be altered or copied, you have the potential to create a completely unique piece of digital information. Since these pieces can’t be duplicated and simultaneously do not require a central server to authenticate themselves, each has the potential to become a store of value, like a coin.

And that is how digital currencies like Bitcoin were invented. Using the blockchain as a network-based general ledger and a system by which unique pieces of data can be “discovered” through the use of a very complex math problem with an upper limit on the number of data pieces that can be found, all the elements are in place for a decentralized electronic economy that relies on nothing more than network connectivity to function.

According to the Harvard Business Review, the impact of blockchain technology will be felt beyond the financial services industry. The advent of blockchain technology is likely to usher in all manner of interesting applications ranging from finance and accounting applications to philanthropy and everything in between. The distributed ledger is already finding its way into non-profit organizations and spawning new kinds of business models along the way.

Like computers themselves, the only limitation on what is possible lies in the imaginations of the people who are utilizing technology to solve problems. The invention and proliferation of blockchain technology only fuels the imaginations of those solving problems in today’s world.