First published 2022
Blockchain is a method of breaking data into blocks that are linked by cryptography (codes) so the data is very secure and difficult to change. This method of encrypting data makes it very difficult to hack. It was invented in 1991 but was not used properly until 2009 when the ‘cryptocurrency’ BitCoin was made using the method. It is so safe and reliable that it is being used for lots of things, especially new online ‘cryptocurrencies’ like Bitcoin. The technology behind Blockchain is improving and it is slowly being introduced into new areas which is having a big impact on how the world works.
Blockchain has three methods of encryption that together make the data very safe and reliable. Firstly, the data is broken into blocks. Each block contains a special code called a ‘hash’. The hash is then linked to the data in the block. Change the data and the hash code changes. Each block also contains the hash of the block behind it – so they all link up. If you change one hash the chain is broken and the data does not work.
What is to stop us from making a program that can change the data in the blocks and re-write all the hash codes at the same time – thereby ‘hacking’ the data in the block? The process required to edit a hash code has deliberately been made so difficult that even a supercomputer takes about 10 minutes to re-write one code. This is called ‘Proof of Work’ and it slows down the process so much that it is almost impossible to re-write all of the hash codes at the same time.
The next step in making the Blockchain safe is to spread multiple copies of it around the Internet – this is called a ‘peer to peer’ system or ‘a distributed ledger’. If anyone makes changes to one of the Blockchains these changes are checked against the others, if they do not match the changes are refused. This means you would have to ‘hack’ al of the copies of the Blockchain at the same time, making it almost impossible to do so.
What could it be used for? New Currency: A Blockchain currency is not controlled by any bank or government which, arguably, makes it safer and more stable. Health Records: Health records need to be kept private but also shared quickly in an emergency – Blockchain could help do this. Land Titles: In developing countries keeping track of who owns what land is difficult when there are no trusted organizations to do it. Blockchain could do this which would give businesses more confidence to invest and spend money in those countries. School Records: It is expensive to get university degrees ‘authenticated’ by lawyers – Blockchain could solve this by making sure your academic record could never be hacked or changed.
To create new Blockchains very powerful computers must complete the ‘Proof of Work’ to make new hash codes for the new blocks. Some companies do this for the new ‘cryptocurrencies’ and sell on the new Blockchain they create. Because it takes a very long time and each Blockchain is limited by the algorithms to how many there can ever be – this is called ‘mining’. It takes a long time, lots of fast computers and lots and lots of electricity, which poses challenges for the environment.
It was only the advent of the Internet that made computers ‘must have’ items for every home. And indeed it is the Internet that has enabled the crypto revolution. The pace of adoption and growth in cryptocurrency has been staggering. Yet most people have yet to embrace cryptocurrency on any level, and there is also arguably something of a generational gulf. It certainly seems that crypto appeal to millennials much more than older people – a Piplsay study in May 2021 found that half of millennials own cryptocurrency; a much higher percentage than any other surveyed demographic.
Not only do many people not understand the blockchain, cryptocurrency, NFTs, and a host of related topics, they also don’t see their potential. Cryptocurrency is still often viewed as a novelty, a gimmick, a fly-by-night obscurity that couldn’t possibly exist alongside the good old dollar. However, increasingly, that view isn’t shared by the mainstream financial industry. Institutional and investment money is rapidly flowing into cryptocurrency. While banks and other major financial institutions may initially have been hostile towards cryptos, their attitude now ranges from a tacit acceptance of the concept to outright enthusiasm.
Links
Create An Essay4U 