As you have no doubt heard, blockchain is a big deal. It's the basis of most cryptocurrencies today and is responsible for maintaining almost 1 trillion US dollars worth of crypto as I write this.
Blockchain technology has several uses beyond its role in cryptocurrency. It can be used to keep track of supply chains, prove ownership of physical assets, allow patients and doctors to selectively share and confirm medical data, pay royalties to musicians, buy and sell real estate, and much more.
But how? What is so special about blockchain? And how can it be used to do all these things?
In this series of articles, we will dive deep into what blockchain is and some of its most common applications. We will explore why blockchain is a big deal and examine its limitations.
One way to think about blockchain is as a giant ledger or spreadsheet that can track any information you want. In the case of cryptocurrencies, the tracked data is either account balances (in the case of Ethereum-like chains) or the owner of specific coins (in the case of Bitcoin-like chains).
But the information you put in the spreadsheet is limited only by your imagination.
Blockchain provides this giant spreadsheet with essential characteristics; and these characteristics are the true source of blockchain’s value as a platform for enhancing so many applications. These can be summarized into three key areas:
Let's explore each of these characteristics to understand better the multifaceted value provided by blockchain.
This is the big one. The benefits of blockchain would have no merit if it was not secure. This security permeates all other elements of the blockchain and is achieved through a series of mechanisms.
Blockchain’s security reveals itself in many ways:
Decentralization goes hand in hand with security. Decentralization means that no one computer or person is in charge of the operation of the blockchain. This concept can be seen in the following ways:
The quality of “openness” is both a consequence and a requirement of blockchain’s ability to continue in operation. It manifests itself in the following ways:
Blockchain technology offers a unique combination of security, decentralization, and openness, making it a game-changer in the world of cryptocurrencies. However, these characteristics make it an ideal platform for various applications beyond digital currencies. From supply chain management to acquiring real estate, blockchain's decentralized and secure nature provides a powerful tool for creating transparent, trustworthy, and efficient systems. As blockchain technology continues to evolve, we can expect to see even more innovative applications emerge, transforming industries and improving our daily lives in countless ways.
In the next article, we will look at some of the most important applications of blockchain technology today. If you’re interested in developing a blockchain project, contact us to discuss it.
Photo by NASA.
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