What is Blockchain?
Blockchain is a technology that serves as a secure digital ledger or database that stores information. New information is stored as blocks of data that link to the parent block in a chain-like manner. Blocks are typically added at regular time intervals known as the block time and when the block is completed, the included data becomes verifiable. Each new block is tethered or chained to the previous one, and this process continues, forming a “blockchain.”
What makes blockchain technology unique is that it enforces transparency. Once new information is successfully recorded onto the ledger, it is virtually impossible to alter. A blockchain stores information on its network in a way that is immutable, tamper-proof, and decentralized.
Who Invented Blockchain?
History has it that blockchain technology was first conceptualized in 1991 by Stuart Haber and W. Scott Stornetta. These two research scientists introduced a computational, time-stamping digital solution to record transactions that cannot be tampered with.
The first blockchain was released in 2009 by Bitcoin creator Satoshi Nakamoto after publishing a paper one year earlier entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System.
Interesting to note: Although there are several theories as to the identity of Satoshi Nakamoto, to this day, her/his/their true identity remains completely unknown.
Types of Blockchains
The growing demand for blockchain technology has led to the creation of four different types of blockchains. Of the four, private and public blockchains are the most popular.
The four blockchain types are as follows:
- Public blockchain
- Private blockchain
- Consortium blockchain
- Hybrid blockchain
1. Public Blockchain
Public blockchains are ledger systems that are decentralized, which means that no one single entity has control over the network. They are open to the public and accessible by all. There are no restrictions on the participants, and anyone can view current and old records or transactions and verify or validate them. This accessibility does not mean that transactions can be tampered with; rather, it means added security exists through public transparency. Public blockchains are very secure because this transparency protects records from being changed by an external body.
2. Private Blockchain
Unlike public blockchains, private blockchains are not open to the public. They are not decentralized as a regulatory body or department controls them. Often, business owners and organizations use this blockchain type to conduct transactions and share sensitive data within the organization.
A private network can only be joined when invited by the administrator. Private blockchains can be faster and more efficient than public blockchains because they have fewer users. At the same time, they are generally less secure than public blockchains due to their security being in the hands of their developer(s).
3. Consortium Blockchain
Consortium blockchains are like private blockchains, but rather than being managed by a single entity, a group of organizations governs them. They combine private and public blockchains, and as such, some parts of the blockchain are made public while others are kept private. As a result, consortium blockchains allow for more efficiency both individually and as a group. These blockchains are often used by banks, government institutions, and other related organizations.
4. Hybrid Blockchain
Hybrid blockchains combine private both public blockchains and have characteristics of each. A hybrid blockchain combines the privacy of a private blockchain with the transparency and security of a public blockchain. The users control access to data that doesn’t require permission, while other data is only available on a private network to those given access.
How is Blockchain Used?
Blockchain is seen by many as a revolutionary technology that challenges the conventional methods of doing business and making transactions for both individuals and organizations. Let’s look at some real-life applications of blockchain technology:
● Blockchain and Finance
Blockchain is the backbone of Bitcoin and other cryptocurrencies that have continued to disrupt traditional finance over time. It takes control of financial assets away from centralized authorities like banks and hands it over to the individual for decentralized peer-to-peer transactions.
Blockchain allows cross-border transactions and remittances to occur quickly and with low fees compared to traditional finance.
Additionally, blockchain technology offers a more accessible way to engage with money for many people in the world who do not possess access to a bank account.
● Smart Contracts
The term “contract” may bring to mind the conventional paper-type agreement reached by two or more individuals. This agreement contains various legal terms that bind an agreement used for financial transactions, property transfer, signing a new deal, etc.
Blockchain-based contracts, known as smart contracts, are digital contracts that contain all of the terms the parties involved have agreed to. Computers execute smart contracts once the parties involved meet the preset conditions. Because all of this takes place on a decentralized system, the need for supervising third-parties is reduced or eliminated entirely.
● Blockchain and Art
There is a variety of new and intriguing uses for Blockchain technology in the art and creative industries. Artworks can now be converted into digital tokens known as Non-Fungible Tokens that represent assets like artworks, music, and collectibles on the blockchain.
Artworks can be assigned distinct identification codes and data using blockchain technology that makes each piece unique. As a result, digital artists can issue and sell custom art that gives them true ownership over their work.
In addition, smart contracts associated with NFTs can allow artists to receive perpetual royalties from resales of their digital art.
The intersection of blockchain and art is proving to yield creative, efficient, and lucrative results.
● Blockchain and Music
Using blockchain technology, record companies can trace music streams, significantly decreasing how long an artist waits to receive payment. As a result, musicians can keep better track of royalty payments in real-time, which helps to ensure timely and fair payments.
Blockchain technology and specifically the use of cryptocurrencies allow fans to easily tip musicians and pay for merch without intermediaries that would typically be taking a cut.
As with the art industry, blockchain integration within the music industry is expanding rapidly and continues to be implemented in innovative ways.
● Blockchain and Philanthropy
Blockchain and smart contracts are proving to be very useful for philanthropic organizations because of their decentralized and transparent nature. Blockchain technology allows donors to self-verify donations and see exactly how their money is being used, strengthening trust in the organization.
Charities are increasingly accepting cryptocurrency donations. Some examples include:
- The Water Project
- Code To Inspire
- Electronic Frontier Foundation
- Wikimedia Foundation
- Free Software Project
For Resources on Blockchain Altruism, check out our Toolbox.
- A blockchain is a digital ledger that stores transactions and records information in blocks.
- A blockchain stores information on its network in a way that is immutable, tamper-proof, and decentralized.
- The first blockchain was released by Bitcoin creator Satoshi Nakamoto, the true identity of whom remains unknown.
- There are currently four main types of blockchains; public, private, consortium, and hybrid.
- Blockchain technology is spread across many industries and its use cases are rapidly expanding