Even though it has become a very popular technology, it’s not easy to grasp how it really works, and how powerful it is.
It came to life in 2008, created by an unknown person (or group of people) under the pseudonym of Satoshi Nakamoto.
Since then, the Blockchain technology has exploded in popularity, with many people calling it the foundation for a completely new internet – an internet where value and content isn’t copied, but is distributed.
The first use for Blockchain was to create the first digital currency that, today, people are making (or losing) fortunes on – Bitcoin. Now there are over 700 (and growing) different cryptocurrencies.
A blockchain is a digital book of records – or a ledger – of transactions. It is essentially what allows Bitcoin owners to perform transactions, but developers have quickly realised that the technology can be used to store other valuable records as well, not just transaction information.
It’s like a document which updates in real time whenever somebody makes a change, and the document is duplicated on every computer in a given network. Blockchain is a shared database.
The data stored with blockchain doesn’t have one central storage location, it is distributed. This makes the data easy to verify, truly public, and very secure because hackers don’t have a single place to attack – they would have to simultaneously attack every computer which hosts the data.
Relational and object-oriented databases are closed off. There can’t be two people making changes to them at the same time. To make an edit or update, someone has to lockdown the database, and the result won’t be visible to others unless someone chooses to share it.
Because blockchain stores blocks of identical data across a whole network, it means that it has no central point of vulnerability to hacking or failure, and that it can’t be controlled by anyone.
So far, Bitcoin, the first known project based on blockchain, has really never failed. The only failures that we have seen were due to human error or calculated fraud.
This technology can also finally bring responsibility and accountability to the online world. With public and distributed data, transactions cannot be fixed by third parties, errors are instantly visible to everyone, and fraudulent behaviour is easy to detect.
A blockchain database constantly updates and audits itself thanks to the underlying technology, which makes it perfect for a scalable digital enterprise.
The blockchain database, or network, consists of many Nodes. One Node means a computer connected to the network, with the right software client for validating and relaying transactions, which holds a copy of the whole blockchain. Every Node is an administrator.