What is Blockchain Technology?

If your news feed is anything like mine, then you have undoubtedly seen many articles espousing the importance of blockchain technology. Perhaps you have heard of it only in terms of Bitcoin, but blockchain technology has more far-reaching implications for online security than cryptocurrency.

What it is

Like most things, blockchain has layers of complexity to it that are beyond this blog post. However, the central idea is quite simple: blockchain is a ledger to track transactions that doesn’t exist in just one spot, but in many spots, making it safe from hacking or manipulation.

Imagine that you have a spreadsheet of your business transactions on your computer – cashflow, for instance. You track your expenses and your revenue on this spreadsheet and see if you have positive or negative cash flow. If you wanted to present a more positive picture of your financial situation, you could move some assets around and make the business look more appealing. If someone wanted to hack into your computer, they could easily gain control of this spreadsheet and hold it for ransom (pretend that is not the weirdest thing in the world to kidnap, for the sake of this analogy). This ledger is therefore corruptible. But if a copy of this ledger existed on thousands of other computers and had to be constantly reconciled – suddenly it becomes incorruptible. That is blockchain technology.

Why it matters

The clear benefit of blockchain technology is that it is truly shared. No single entity can ever control it and one security failure cannot collapse it. It is truly transparent and almost impossible to corrupt.

This technology could be useful in far more applications than Bitcoin transactions. Avoiding storing important data in just one place makes it more secure. This is the very definition of not storing all of your eggs in one basket. It is called “decentralization”, and whether you understand it or not, it will become important to your online future. It might even save you money. Goldman Sachs believes that blockchain technology could represent global savings of up to $6bn per year.

The internet is home to so many trends and so much hype. Sometimes, though, the simplest concepts really will revolutionize how we store data online. Blockchain technology seems to be one of those concepts.