Bitcoin and blockchain tech have been dominating headlines recently, but to many business owners not in the know, they remain something of a mystery. Yet with a growing belief that blockchain is – in fact – changing the world at a significant pace, it’s probably a good idea to at least try and get your head around what it is.
So, what exactly do you need to know?
In essence, blockchain is all about decentralisation. Rather than holding lots of sensitive information in one place and processing it all from there, blockchain technology enables it to be stored on lots of different computers.
And although this may sound like a security crisis waiting to happen, it’s precisely because this data is located in multiple places – and free from any personally identifiable information – that no one can meddle with it. As the data is shared across a vast number of computers at once, and updated on a constant basis, it is easily verified. Plus, any attempts to hack the blockchain will be identified and thwarted by the other machines that hold the same information.
What can it be used for?
The most widely known use of blockchain is for the exchange of cryptocurrencies, such as bitcoin. Where these are concerned, it acts as a kind of ledger – each time a bitcoin is bought or sold, the transaction is verified by another user and added to the record, all counting towards a ‘block’ in the chain.
But where it differs from a traditional ledger is that each transaction is there for life – there is no way that these can be corrupted or amended, making it an accurate and secure record of information.
And the potential for this tech reaches far further than just the digital finance arena. The collaborative nature of blockchain means it’s being advocated as an important tool for democracy, for instance. Rather than one person or entity overseeing important processes – such as a bank managing financial transactions, or a third-party organisation counting votes – blockchain removes this power and responsibility from the individual, and shares it amongst the collective. This enables everyone to keep track of what’s happening, without giving one person absolute control over the process or outcome.
What else do I need to know?
Without getting into the nitty-gritty of cryptocurrency markets and other mind-boggling areas of this fast-developing tech, there are a few key ways that blockchain is set to affect the business world – and some issues to be aware of.
To begin with, it’s a common opinion that the best thing about the technology is that it enables value to be attributed to things that only ‘exist’ in a digital sense. This means that creative assets will be easier to trade, giving the makers themselves more control over their products and enabling them to bypass middleman corporations.
But as with everything, there’s a darker side to the tech as well. As the popularity of blockchain grows – which seems certain – the number of hacking attempts is sure to increase too. Although the main weaknesses are caused by inadequate passwords and authentication, rather than the tech itself, it’s still important to be aware that this is an area that cyber-criminals will be actively targeting as its value continues to build.
A large part of this projected growth will be achieved through the widened use of blockchain tech in areas other than just banking and finance. We’ve already mentioned its democratic elements, and there has also been a lot of talk around the benefits it has for scientific research and other academia. Thanks to the traceability of the data that’s exchanged, scholars and practitioners around the world could share their findings in real-time and have their work peer-reviewed without any worry about anyone taking credit for it.
Other industries that are supposedly set to be revolutionised by this innovative tech are agriculture, logistics and transportation, energy, and supply chain management – although its influence is sure to be felt across all sectors in the near future. So, whilst we are still very much in the early stages with blockchain, there is boundless potential for harnessing it on the horizon.
If this blog helped to demystify blockchain for you, why not let us shed some light on other areas of IT for you as well? We’re relentlessly straight-talking in our approach and provide a wide range of support options – contact us for more information!