What is Blockchain Technology?

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What is Blockchain Technology and How is It Changing Digital Security?

Blockchain is one of the most popular buzzwords in technology right now.  It was originally used with Bitcoin, a cryptocurrency that refers to a digital coin.  It’s a rather complicated to understand and explain, but knowing how the Blockchain works with bitcoin will help us translate how the technology can be used in many other real-world scenarios.

The Blockchain behind bitcoin is a public ledger of every transaction that has taken place.  It cannot be changed or tampered with retrospectively, so advocates of technology believe that it makes transactions secure and safer than current systems. 

Bitcoin is not controlled by one central authority.  While traditional currencies are issued by central banks, bitcoin is maintained by a network of people known as miners.  These miners, sometimes known as “nodes”, use computers to solve complex mathematical problems to complete transactions.  Each transaction originates from a wallet with a private key, that is, a digital signature that provides proof that the transaction has come from the owner of the wallet.  These transactions take place all over the world and are grouped together into a block, organized by strict cryptographic rules.  The block is sent to the bitcoin network for validation.  The winner receives an award in bitcoin.  The validated block is then added to previous blocks, creating a blockchain.  One of the advantages of blockchain is that it can’t be tampered with. Each block that is added onto the chain carries a hard, cryptographic reference to the previous block.

One of the greatest aspects of blockchain technology is the ability to customize it. This means a blockchain can be completely open to the public or it can be totally private.  Bitcoin is an example of an open-source public blockchain that allows anyone to join, whereas a private blockchain would be perfect for a business.

The security of blockchain technology shows promise for many industries to potentially reduce costs and make processes more efficient and secure.  These may include banking, tracking products across a supply chain, payments, voting, music sharing, state identifications, and even the possibility to help tech companies manage the Internet of Things.  While blockchain technology is being experimented with across a number of industries, the future is still uncertain and the power and limitations of this technology is still unclear.  No one really knows if blockchain will become viable on a larger scale, but wouldn’t it be helpful if it could keep passwords so that we only needed to remember one passcode for everything?

There is a host of legal, regulatory and technological concerns that need to be addressed before we start seeing widespread use, but there is a good chance that our digital lives may be using blockchain technology before we even realize it.