What is blockchain technology?
People rely on databases to store and transfer information to one another. But these databases are owned by companies that have access to the sensitive data you save on their systems (like bank details, financial transactions, and private messages).
Because people don’t trust these companies to keep their data secure or private, they’ve invented a platform that stores and transfers data in a new way, and lets you keep it safe. This technology is called blockchain, and people are excited by its potential applications.
Where the need for blockchain technology came from?
Computers store and organize information on a database - the most common of which is called a relational database. Relational databases are like fancy Excel spreadsheets - they structure information in different tables that consist of columns and rows. These tables are then stored on hard drives which can be accessed by servers over the internet.
Your phone’s contact book app is a perfect example of technology built around a relational database. It relates specific phone numbers to different people in your address book in a simple, logical manner.
People can add to, edit, remove, or retrieve information from a relational database using a special instruction known as a request. But as more information is added to a database, and an increasing number of people try to retrieve it, computers need to work harder to process the ever growing number of requests directed towards them.
To cope with the growing strain on their hard drives and computer processors, the companies that own the databases need to spend money designing, building, and installing faster, fancier computers - as well as implementing additional software to keep your data safe from hackers.
Given the expense involved in building and maintaining IT infrastructure at this scale, it makes sense that companies would want to monetize the wealth of information they’ve accumulated in their databases. Selling user data to advertisers or organizations looking to maintain a competitive edge is one widely practiced and lucrative way of achieving this, and Facebook’s $19 billion acquisition of WhatsApp in 2014 is a dramatic illustration of how valuable user data is to an organization, and how much they are willing to pay for it.
According to CNN data is now a $300 billion a year industry, and it all stems from the fact that millions of people are willing to sacrifice privacy in order to conveniently use software for free. We’ve resigned ourselves to letting companies do with our data as they please primarily because we rely on their IT infrastructure to power many of our favorite tools.
Blockchain technology challenges this power dynamic. Blockchain is an alternative way to save and transmit data between computers, all while keeping it secure, private, and decentralized - kind of like an extremely safe database that isn’t owned by anybody.
How blockchain technology works?
Before computers, people kept their important documents safe by making lots of copies of them and storing them in impenetrable steel safes, buried treasure chests, or bank vaults. As an added security measure you’d 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 stuff, they wouldn’t be able to understand your cryptic messages, and you’d still have lots of backups stored in other locations.
Blockchain puts this concept on steroids. Imagine you and a million friends are able to make copies of all your files, encrypt them with special software, and save them in each other's digital bank vaults (computers) all across the internet. That way even if a hacker breaks into, steals, or destroys your computer, they can’t interpret your data, and your network of friends still have 999,999 backups of your files.
That’s blockchain in a nutshell. Special files, scrambled with encryption software so that only certain people can read them, saved on normal computers, linked together over a network or via the internet. The files are called ledgers - they record your data in a specific way. The computers are called nodes or blocks - personal computers that share their processing power, storage space, and bandwidth with one another. And the network is called a chain - a series of connected blocks that let computers work together to share ledgers from one another (hence the name, blockchain).
Five characteristics of blockchain technology?
Now let’s take a look at these different elements of blockchain more closely. The technology has five core components, some of which are difficult to wrap your head around - but I’ve tried to explain each simply.
Distributed ledgers - Millions of copies of a database that is continuously updated by anybody connected to a network.Imagine a giant spreadsheet that everybody has access to via the internet. The spreadsheet contains digital records of different things (like the value of a currency, files like PDFs or images, or even a historical list of different transactions). Whenever the spreadsheet is modified on one computer it is replicated, shared, and synchronized so that the changes are saved to all the other computers connected to the network.
Peer-to-peer network - A network of computers that lets devices combine their power to complete more tasks faster.
Cryptographic Hash Function - A type of encryption software.A hash takes a message (like the record of a transaction), randomly scrambles it into funny looking code, and makes it virtually impossible to decipher without a signature or key (an instruction that lets the right people unscramble the message again).
Immutability - a security feature that makes it impossible to change or alter data without permission.
Pseudonymity - Let’s people decide whether they want to remain anonymous or share their identity with others on the network.
How blockchain technology could change the workplace for young professionals?
According to the MIT Sloan Management review, blockchain technology can be applied to many things. Not only does it promise to enhance the workplace and lives of people within it, it threatens to disrupt the entire way in which business is conducted, the public institutions we rely on, and the very system of government we take for granted.
Say goodbye to intermediaries - Now that companies have a secure way of transacting with consumers directly, they no longer need to rely on platforms owned by third-parties (like banks) to conduct commerce. This will make companies more self-sufficient, open up the possibility of internal financial departments, as well as making the retail experience more flexible and immediate.
Revolutionizing healthcare - Blockchain gives patients more control over their sensitive medical information, a hospital’s ability to streamline and share it, and everybody’s ability to protect it. Indeed, this much is true for any industry involved in compiling and distributing sensitive information about individuals between practitioners or departments.
Employee compensation - Blockchain will make it easier to pay employees, and circumvent costly fees often associated with paying teams that work overseas. That means that companies will have fewer financial barriers when it comes to international expansion, making it increasingly likely that you’ll work with people and departments from all over the world.
Enhanced democracy - Even good governments are prone to corruption, rigged voting, and an ultimate disillusion of democracy in the eyes of its citizens. Blockchain potentially allows us the ability to vote in a manner that’s impervious to outside meddling or the influence of corruption.
The key takeaway
Innovation will continue to redefine the workplace. That’s why it’s crucial for young professionals to keep pace with technological developments, understand how they work, and anticipate how they will revolutionize the organizations and economies that they work in.
Please, let me know what do you think about blockchain technology? will it change the world? do you find it exciting?