Think of an un-hackable database simultaneously hosted by millions of computers around the world. Imagine an incorruptible digital ledger of economic transactions that can be programmed to record virtually everything of value. That’s blockchain technology.
Information held on a blockchain exists as a shared database. The blockchain database isn’t stored in any single location; the records it keeps are completely public and easily verifiable. Anyone on the Internet has access to the database. And because there is no centralized version of this information, there is nothing for a hacker to corrupt.
Blockchain was originally devised by a group of people known by the pseudonym Satoshi Nakamoto to enable bitcoin transactions. It works by allowing digital information to be distributed but not copied.
The tech community quickly realized that blockchain technology has more applications than digital currency transfer. Proponents say it will revolutionize the financial world and that it can be used to protect the rights to both real and intellectual property, guarantee voter honesty, ensure political transparency, keep track of land deeds, eliminate contract disputes, redistribute global wealth,… The list is seemingly endless.
While the financial applications of blockchain technology are indisputably intriguing, some of the claims for blockchain seem a trifle exaggerated if not downright naive. To assume that a land deed held in the blockchain will prevent third world dictators from stealing a peasant’s farm requires a belief that dictators are governed by rule of law. History seems to belie that supposition. And one must wonder what happens when disputes arise (which they always do when human beings are involved) if no organization exercises any authority over the blockchain. The Internet was originally intended to be a completely democratized entity and yet recent actions by the FCC show that neither government nor business can maintain a hands-off policy when it comes to anything of so much value. How will blockchain work, for example, with an Internet the access to which is controlled by ISPs?
Many experts question the assertion that blockchain technology is un-hackable. Given that bitcoin itself has had its own trouble with cyber criminals, trusting the entire world’s financial system to blockchain seems a tad premature.
Want to learn more about blockchain technology from the pint of view of a blockchain enthusiast? Listen to the Ted Talk by Don Tapscott, author of Blockchain Revolution.