If, by some chance, you were stranded on a deserted island or holed up in a monastery for the last decade or so, you might not have heard the term “blockchain.” Anyone who has had access to the internet over the last two or three years, however, will have heard of it by now.
Having heard of it and understanding how it works are two very different things. If you are a little lost in this area, don’t feel alone. It is a revolutionary concept. It works on a principle very similar to that old adage, “Don’t keep all your eggs in one basket,” except that here the “eggs” refer to data.
In fundamental terms, blockchain tech allows data to be stored across a network of computers. The system uses some of the memory and computing power of the computers within the network. That makes it possible for it to run without the need for a single central body controlling everything.
It also provides a backup of a sort. If any of the computers in the network goes down, the others can bear the load. Even if most of the computers were offline, the system would still be able to operate. It would just be slower.
It’s Also About Verification
This tech is considered very secure. Other community members must verify transactions before they can be permanently added to the chain. This involves computers within the community finding the solution to complex equations in order to uncover or mine the data. Once the transaction is validated, it is permanently added to the chain.
This method of validation is known as proof of work. The downside is that several computers within the node will work on the problem at the same time, and this makes for a lot of wasted electricity as the same work is repeated.
Another method of verification, proof of stake, is used by some apps. In this case, the mining of transactions is apportioned according to the stake you own. This is far more efficient, but there are those that feel that it is more prone to manipulation.
Is it All Worth It?
It has already started influencing our lives in ways that you might not expect. You can have a look at the infographic from BitFortune.net to see the major industries that have already been impacted by blockchain technology.
In these industries, it certainly does seem to have been worth. That is not the case in all, though. Take Bitcoin, for example, the blockchain-based app that started it all. Initially, it worked well, but as more and more users have been added, transactions have become more expensive to conduct and are taking longer to process.
So, while this tech was initially envisioned as an alternative digital currency, Bitcoin has shown us that there are obstacles that need to be overcome before widespread usage is possible.
It would be a mistake, however, to rule the blockchain tech out. There are a lot more applications than simply digital payments. We are moving from a material world to a blockchain one.