What is Blockchain Technology?
From a different view, the blockchain isn’t too different from the Wikipedia we know today. The Wikepedia content isn't provided by a single entity and isn’t controlled by any particular person. Likewise, using the blockchain, users can input data into a record of information, where the editing and updating of the record of information is controlled by a user community. Wikipedia is built into the World Wide Web (WWW) using a client-server network model; although they both run on a distributed network (the internet), the blockchain network technology’s uniqueness will become clear as we go further.
With Wikipedia, a user with permission is able to edit entries on the centralized server and other users who access the page at any time would get the updated version of the ‘master copy’. The control of the database is maintained by Wikipedia administrators granting access and permission to users.
The digital framework for Wikipedia is similar to the highly secure and centralized databases used by the governments, insurance companies or banks today. The control, authorizations, protection against cyber threats and management rests exclusively with the owners.
The distributed database of the blockchain technology possesses a different digital backbone which is the most important and unique feature of the blockchain technology.
With Wikipedia, the ‘master copy’ is updated on the server and the copy becomes available to all users. In the blockchain, every node in the network agrees on a subject, each updating the data independently with the most popular data becoming the official copy as against there being a master copy.
Transactions are broadcast and every node creates its own independently version.
This difference – the innovation that eliminates the need for a trusted third party to facilitate digital relationships involving the registration and dissemination of information – makes the blockchain technology greatly important. The blockchain technology is not a new technology but only an application of a combination of tested technologies – the internet, private key cryptography and a protocol governing incentivization. The outcome is a robust network architecture of blockchain technology which secures digital relationships elegantly without the need of a trusted third party.
Defining digital trust
In the digital world, the definition of trust is always streamlined to authentication (identity verification) and authorization.
In lay terms, ‘are you certain you are who you claim to be?’ and ‘do you have permission to do what you want to do?’
For the blockchain technology, the authorization requirements are provided by the private key which signifies ownership. It also protects the user from sharing more than required personal information, making them vulnerable to attacks from hackers, during an exchange. However, just the authorization isn’t enough. A distributed, peer-to-peer network is required with adequate authorization – having enough money, broadcasting the correct transaction type, etc. this network reduces the risk of a centralized corruption or failure.
The distributed network should also be responsible for information (record) storage and security. Authorizing transactions is achieved when the entire network applies the set out rules designed by origin (blockchain protocol).
Proper authentication and authorization creates a world of digital interactions that doesn’t rely on (expensive) trust. In the world of today, industries and entrepreneur have realized the beauty of the possibility of an unimagined powerful digital relationship. The blockchain technology is often described as the foundation of the internet of Value, the backbone for transaction layers on the internet.
Just the idea of cryptographic keys and shared ledgers serving as an incentive to users for a secure and formal digital relationship has caused series of imaginations with everyone, including banks, IT firms and government, trying to develop this transaction layer.
The blockchain technology has created the authentication and authorization which are vital to the world of digital transactions and can be applied for a need requiring a trustworthy system of record.