Blockchain was originally created to be a decentralized book of Bitcoin transactions that take place within the Bitcoin network. A decentralized or distributed database / book basically means that the storage devices where the books are located are not connected to a common processor. The blockchain contains an increasing list of block transactions. Each block is time-stamped and then linked to the previous block to become part of a block of blocks.
Before computers, people kept their important documents by making lots of copies and storing them in impenetrable steel safes, buried treasure chests, or bank vaults. As an added security measure, you would translate each of these documents into a secret language that only you could understand. That way, even if someone managed to break into your bank vault and steal your belongings, they won’t be able to understand your secret messages, and you’ll still have a lot of backups stored elsewhere.
Blockchain puts this concept on steroids. Imagine that you and a million friends can copy all your files, encrypt them with special software and store them in digital vaults (computers) across the Internet. That way, even if a hacker breaks into, steals, or destroys your computer, it can’t interpret your information, and your network of friends still has 999,999 backups of your files. It’s a blockchain for short.
Special files, encrypted with encryption software so that they can only be read by certain people, stored on normal computers, linked together over a network or over the Internet. Files are called general ledgers – they record your data in a certain way. Computers are called nodes or blocks – personal computers that share their processing power, storage space and bandwidth. And a network is called a chain – a series of connected blocks that allow computers to share general ledgers (hence the name, blockchain).
The social impact of blockchain technology is already beginning to be understood and this is perhaps just the tip of the iceberg. Cryptocurrencies have already cast doubt on financial services through digital wallets, the introduction of ATMs, and the provision of loans and payment systems. Given the fact that there are more than 2 billion people living in the world today without a bank account, such a shift is certainly life-changing and can only be positive.
The transition to cryptocurrencies may be easier for developing countries than the fiat money and credit card process. In a way, it is similar to the transformation that developing countries have had with mobile phones. It was easier to procure massive quantities of mobile phones than to provide new infrastructure for landlines. Decentralization outside governments and control over people’s lives are likely to be accepted by many, and the social implications can be quite significant.
The multitude of identity thefts that have hit the news in recent years should be taken into account. Handing over control of identification to people would certainly eliminate such events and allow people to disclose information with confidence. In addition to providing access to privileged banking services, greater transparency could also increase the profile and efficiency of charities operating in developing countries that fall under corrupt or manipulative governments. An increased level of confidence in where the money goes and who benefits will certainly lead to increased contributions and support to those in need in parts of the world that desperately need help. Ironically, but not in line with public opinion, a blockchain can build a financial system based on trust.
Going a step further, blockchain technology is in a good position to remove the possibility of voice tuning and all other negatives associated with the current process. Believe it or not, Blockchain can actually solve some of these problems. Of course, with new technology there are new obstacles and problems to come, but the cycle continues and these new problems will be solved with more sophisticated solutions.
A decentralized book would provide all the necessary data for accurate recording of votes on an anonymous basis and check the accuracy and whether there was any manipulation of the voting process. There would be no intimidation if voters could vote in the privacy of their home.
Whether blockchain technology will actually become a part of everyday life remains to be seen. Although inflated expectations have increased the possibility of the end of central banks and their responsibilities as we know them today, the end of the centralized financial system may be too far for now. Time will tell how the blockchain is evolving, but one thing seems certain today. The status quo is no longer an option and a change is needed.