The concept of blockchain technology has been around for decades now. Little did people know that the idea of collectively validating digital transactions was not developed for cryptocurrency. Rather, it was a proposal for solving the question of “who made it first” in inventions through time-stamping digital documents, creating unique digital certificates, and linking information not only to the prior transaction but also to a set number of future transactions. From there, people started to create concepts that include cryptographically secured chains with the appropriate proposed implementation.
The rise in popularity of blockchain technology started in 2008 when the developer(s) under the pseudonym Satoshi Nakamto published a whitepaper (constituting) a model of a blockchain and later implemented it to release the now-famous cryptocurrency, Bitcoin. From that spark, developers began to explore other practical uses of the technology outside of cryptocurrency. The use of blockchain tech in financial and inter-organizational transactions birthed the Blockchain 2.0, which refers to the use of blockchain technology outside of currency. Further down the line, the Ethereum blockchain system introduced the use of computer programs to represent finance instruments in blocks, which later became known as smart contracts.
And as the cryptocurrencies gained traction during this pandemic, so did blockchain technology. The innovation helped in devising tracking systems in response to the spread of COVID-19 while still imposing security and data privacy alongside data transparency. In commerce, the virus highlighted the weaknesses in supply chains. Businesses suffered the inability to deploy resources and difficulty in collecting data for rapid management decisions. Although blockchain solutions have been under development for years now, it was the pandemic that pulled it from the wraps and continues to feature its advantages. Many believe that blockchain technology will boost the global supply chain and jumpstart the economy. As blockchain technology becomes a norm in the industry, more people become curious about what it is. They search for answers on how it works and what makes it special enough to have its own “blockchain evangelists”.
Simply put, blockchain is an immutable and distributed ledger. The tech allows trading and recording of virtually anything in the network. These assets can be anything tangible, like cash and properties, or intangible, like intellectual properties, patents, cryptocurrency. There are several important steps on how blockchain works. The idea is that whenever a participant makes a transaction, the chain creates a block to record it. Several authenticators from different nodes validate these transactions through programs. Then, once the nodes validated and authenticated a block, the network links it to an already existing “chain of blocks”. Records of the block are then updated and distributed across the network, signifying a completed transaction. Depending on the model (PoW, PoS, etc.), the network then awards assets, usually cryptocurrencies, to nodes for validating the block.
Aside from knowing the basics of the process, aspiring enthusiasts must know key features that make blockchain technology well-known today. It starts with its shared ledger. All participants in the network have access to this ledger along with the recorded transactions. Blockchain only records transactions once which then eliminates the wasteful duplication of entries in separate registers common in traditional businesses. Moreover, these records of transactions are unmodifiable.
Although all participants have access to the records, no user can tamper with any of the details after the network records them on the ledger. In case of errors, users must add a new transaction to fix it, making both transactions visible in the ledger. Lastly, these transactions are sped up through the use of smart contracts. Basically, smart contracts are programs stored on the blockchain that automatically execute transactions upon meeting a predetermined set of rules and conditions. Terms on a smart contract can range from simple rules on peer-to-peer exchange to long contracts for corporate bond transfers.
Although known as the underlying technology for cryptocurrency, blockchain systems have proven that it is not merely for financial transactions. As stated from one example above, it had unlocked possibilities for different businesses and industries. Through blockchain networks, people can now trace even the origins of the salmon from the time the fishermen caught it, till it lands on someone’s plate. It hastens distribution on different industries such as oil, automotive, etc. and minimizes disruptions. The healthcare sector also benefits from this technology as they establish systems for centralized filing of patient records. The ledger technology can easily be embedded in their system as it supports encrypted data for storing medical documents while allowing easy transfer of records across departments or even hospitals. During this pandemic, institutions relied on blockchain to devise systems to quickly track and mitigate the spread of the virus while keeping people’s data anonymous and incorruptible.
The Next Steps
The dawn of blockchain tech is here. By 2026, blockchain is expected to add a business value of USD 360 billion and is projected to reach trillions by 2030. As industries and governments embrace blockchain, enthusiasts can anticipate developments in the technology in terms of scalability and deployment. People can expect faster, efficient, and transparent services and transactions as supply chains adopt the system. Now that we have passed through the basics and key elements of blockchain, we can now be part of the growing number of people who believe in the power and potential of this innovation and are willing to spend time learning more about the blockchain while disseminating their knowledge and belief in the network.