The current technological age is bearing witness to many paradigm shifts with the web’s constant expansion allowing for innovation in the way we communicate and consume.
Now, due to the wealth of information held in the digital sphere, internet users and their data have become more vulnerable thus requiring protocol to prevent human error, and protection in the form of heightened digital security against targeted threats such as phishing, malware and identity fraud.
Enter blockchain, an encrypted system that is used to anonymously record individual steps throughout the entire exchange of valuable data.
What is Blockchain?
Originally conceived in 2008 by enigmatic Japanese developer Satoshi Nakamoto, blockchain is the technology that allows cryptocurrencies like Bitcoin to be used as legal tender.
Born in the wake of the market crash, it has since been speculated that “blockchains” could have saved institutions like Lehman Brothers from solvency by using the database to regulate anomalies and prevent poor financial practices which lead to their bankruptcy.
The crowning glory of the innovation is the system’s use of decentralised processors which have transformed the way that events within data transactions are being recorded.
How It Works
The blockchain system accumulates a list known as ‘blocks’ to record data from each step of a process, for example, a finance deal.
Each step in the process is chronologically linked to the previous block forming a ‘chain’ or a timeline of proceedings. Data is protected as blockchains are duplicated on each ‘node’, or computer, within a network. The process makes transactions therefore more dependable as every user can access up to date information in real time.
The blockchain style database differs from other online transaction platforms such as Paypal which act as go-between connections to a common server.
Government organisations, banks, technology firms and credit agencies also act as middle men. Often these intermediaries must validate records via physical ledgers such as regulators, counter-parties and auditors. Unlike a blockchain system, this can’t guarantee records have not been tampered with as data is stored on a centralised system, putting it at a higher risk of vulnerability.
This system uses complex algorithms and cryptography to generate unique passwords for each node within a network. This ensures that each user can view an entire blockchain but only edit the data that they own. Furthermore duplicates of each database are attached to every node therefore it is far easier to retrieve corrupted files and tell whether data has been compromised.
Blockchain is not limited to the financial world – the procedure can be used to; protect the rights of consumers through the use of undisputable records, determine the origin of intellectual property like, designs and art, and enable users to monetise their assets whilst protecting their privacy.
Blockchain is still gaining traction and we have yet to see all of its possible applications. It is widely understood that Blockchain provides a secure, transparent network of information, and this will revolutionise industries from banking and insurance to healthcare and retail.
We are already seeing the potential Blockchain can have in transforming retail and consumer goods supply chains. Transparency is of increasing importance to consumers. Blockchain underlies this transparency, allowing all parties—supplier, manufacturer, retailer and end consumer—to trace a product’s journey. A decentralised ledger – blockchain – could improve communications among the complicated web of producers, transporters, distributors, storage facilities, suppliers and retailers.
Envisioning a digitally enabled supply chain strategy is a must-do activity for everyone.
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