Blockchain was originally created to be a decentralized book of Bitcoin transactions that take place on the Bitcoin network. A decentralized or distributed database / ledger essentially means that the storage devices, where the ledgers are located, are not linked to a common processor. The blockchain contains the growing list of blockchain transactions. Each block is marked over time and then linked to the previous block to be part of the blockchain.
Before computers, people kept their important documents safe by making many copies of them and storing them in impenetrable steel safes, buried treasure chests, or bank vaults. As an added security measure, you would 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 store and steal your stuff, they wouldn’t be able to understand your cryptic messages and you would still have many backups stored in other locations.
Blockchain puts this concept on steroids. Imagine that you and a million friends are able to make copies of all your files, encrypt them with special software, and save them to each other’s digital mailboxes (computers) over the Internet. That way, even if a hacker breaks into, steals, or destroys your computer, it can’t interpret your data, and your network of friends still has 999,999 backups of your files. This is blockchain in a nutshell.
Special files, mixed with encryption software so that only a few people can read them, saved on normal computers, linked together via a network or via the Internet. Files are called ledgers: they record your data in a specific way. Computers are called nodes or blocks: personal computers that share their processing power, storage space, and bandwidth. And the network is called a chain: a series of connected blocks that allow teams to work together to share books with each other (hence its name, blockchain).
The social impact of blockchain technology has already begun to be realized and this may be just the tip of the iceberg. Cryptocurrencies have already raised doubts about financial services through digital wallets, the launch of ATMs and the provision of loans and payment systems. If we take into account the fact that there are more than 2 billion people in the world today without a bank account, this change will certainly change lives and can only be positive.
Perhaps the exchange of cryptocurrencies will be easier for developing countries than the process of trust money and credit cards. In a way, it is similar to the transformation that developing countries had with mobile phones. It was easier to acquire large quantities of mobile phones than to provide a new infrastructure for landlines. Decentralization outside governments and control over people’s lives is likely to be accepted by many and the social implications can be quite significant.
Just take into account the avalanche of identity thefts that have hit the news in recent years. Giving ID control to people would surely eliminate these events and allow people to disclose information with confidence. In addition to giving access to disadvantaged services to the most disadvantaged, greater transparency could also increase the profile and effectiveness of charities working in developing countries that are under corrupt or manipulative governments. An increase in the level of confidence in where the money goes and in the benefits would surely lead to increased contributions and support to needs in parts of the world that desperately need help. Ironically, and not in line with public opinion, blockchain can build a financial system based on trust.
Going a step further, blockchain technology is well placed to eliminate the possibility of matching votes and all the other negative aspects associated with the current process. Believe it or not, Blockchain can solve some of these problems. Of course, with new technology, there will be new obstacles and problems, but the cycle continues and these new problems will be solved with more sophisticated solutions.
A decentralized ledger would provide all the data needed to accurately record votes anonymously and verify accuracy and whether there has been any manipulation of the voting process. Bullying would be non-existent, as voters could vote in the privacy of their home.
In fact, if blockchain technology becomes a part of everyday life, it remains to be seen. While inflated expectations increased the possibility of ending central banks and their responsibilities as we know it today, the end of the centralized financial system is perhaps a step too far for now. Time will tell how the blockchain evolves, but one thing seems to be certain today. The status quo is no longer an option and a change is needed.