BLOCKCHAIN TECHNOLOGY
The blockchain is the trendiest trend of the past years that keeps growing. This IT buzzword was on everyone’s lips already in the last years, after it made history when in 2017, bitcoin increased its value from $1000 to roughly $20000 (20 times in one year!), but 2018 brought a major price correction that still hasn’t stopped – bitcoin decreased under $5000. Despite the challenges, blockchain technology has significant potential in providing an alternative trust model opposing banks, governments, and many other institutions.
Everyone has heard of the blockchain, but few actually understand how it works due to its relative complexity, so we will try to introduce it here. Blockchain was invented in 2008 to serve as a ledger of the cryptocurrency bitcoin. Depending on the circles you run in, bitcoin was either:
- The shadiest thing that has ever happened to the internet
- The coolest innovation in modern currency, ever
- A non-factor since you had no idea what it was
In order to clear up any potential confusion, bitcoin is a system of currency that doesn’t rely on banks, countries, or any outside institutions. This is potentially a very big deal, as there are many people living in developing countries that have to deal with issues like hyperinflation, not being able to exchange their currency for others, and having to exchange currency on the black market.
Bitcoin can solve all that – but the technology underlying bitcoin, called blockchain, is the real star of the show. The blockchain is what enables bitcoin users to be able to exchange currency without any fear of being ripped off or getting “counterfeit” bitcoin. Basically, blockchain works by keeping a record of each transaction that happens using Bitcoin as a currency. This record is completely transparent to everyone and is part of the fundamental structure of bitcoin.
As investopedia puts it: “To use conventional banking as an analogy, the blockchain is like a full history of banking transactions. Bitcoin transactions are entered chronologically in a blockchain just the way bank transactions are. Blocks, meanwhile, are like individual bank statements.”
Bitcoin is just one example of using blockchain technology in the cryptocurrencies. Last year was the year of many other that entered the market
This blockchain structure makes it very difficult to forge cryptocurrencies or do any sort of fraudulent activities involving the currency itself. And indeed, its solidity is shown as blockchain is starting to be used by major banks around the world as a way to pay large amounts of money with less time spent on security, thanks to the safety of the blockchain. For example, in October 2016 Wells Fargo and The Commonwealth Bank of Australia made history by using blockchain to faciliate paying for a shipment of cotton from the U.S. to China. The increasing potential does not solely rely on the transaction settlements, but also a highly secure framework for protecting data. In recent years, we have witnessed some shocking data breaches that made users skeptic towards sharing their personal information to 3rd parties. Blockchain has stepped up as an incorruptible encrypted recordkeeper that can be used in securing simple tasks like online shopping. Considering the ups and downs in the last years, blockchain will remain one of the 2019 buzzwords to keep an eye on.
How it will be used in enterprises, we will yet to see.
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