Unraveling the Mysteries of Blockchain
A Simplified Explanation of Blockchain
Blockchain technology is a kind of authentication system that stores identical records at various sources. In essence, unlike a centralized system, everyone has a long chain of records of every transaction which has been processed using a particular coin. A good example would be an open-source online discussion platform, where anyone can write his or her own entry. That is similar to how the blockchain works. Everyone gets a chance to make their entry, and there is no one person who can generate that amount of information alone, even if they wanted to.
However, when you look closer, that is where all the similarities end. While both run on the Internet, the online discussion platform will use a client-server model. A user, or client, who has been authorized by administrators of the online discussion platform, authorizes those who can contribute to the discussion.
Whenever you access the platform, you will receive an updated version of the main copy so that you are able to view all new entries. However, control of the storage lies with the administrators of the site. Thus, all authority comes from the center.
This is quite similar to how the centralized banking system functions; control of the central database is in the hands of the owner. Thus, all updates, access, and protection from cyber-attacks remain at a central point.
How the Blockchain Is Different
On the other hand, blockchain uses a distributed database. This is one of its most important features. For an online platform, the main copy is edited from several sources, and everyone else sees this new version. For the blockchain, every node in the network must arrive at a similar conclusion. Each record is updated independently, and the most popular record then becomes the official record, instead of there being a master copy.
The transactions by every user are broadcast, and each node creates its own updated version. This is what has made blockchain technology so practical to use. This type of system eliminates the need for having a trusted party who can facilitate the digital relationship.
Blockchain Technology Is not New
Many would be tempted to think the blockchain is a new technology, but that is not the case. It is an application of technologies that have been applied to a new purpose. It relies on three technologies; cryptography, the Internet, and protocols governing incentivization.
The result has been a system where people can interact digitally without the need to trust a third party. A simple but robust network of blockchain itself does the job of securing the digital relationship.
What Is Digital Trust?
Trust is a judgement of risk between two or more parties. In the digital arena, trust boils down to being able to give proof of identity, and providing some authorization. In blockchain, the cryptography provides the ownership, which also fulfills the purpose of ownership. Besides that, it also means the owner does not need to share a lot of information, which would leave them exposed.
After authentication, you need authorization. That means you will require a distributed peer-to-peer network to start with. This distributed network reduces the risk that comes with a central system. This system can be applied to any system of record, where trust is needed.
Do you think the blockchain is a great alternative to centralized systems? Leave us your thoughts below.