Many people have heard the term blockchain but don’t know exactly what it is. According to the Oxford dictionary, blockchain is a system in which a record of transactions made in Bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network. In other words, blockchain is the technology underneath cryptocurrencies, such as Bitcoin. According to a recent Wall Street Journal article, blockchain will more than likely survive even if Bitcoin and other cryptocurrencies do not. Blockchain is basically a secure database that spreads across multiple computers. Everybody has the same set of data, so if one person alters the data, it will not do any good.
Besides being the backbone behind cryptocurrencies, blockchain can also be used for many other industries, financial services, real estate title transfers, managing goods on shipping vessels, the safety of food and proving that a diamond purchased actually came from a specific mine in Russia. Blockchain will also open up software developers to many other opportunities, such as when cloud computing was first getting started.
One example of an industry that could be greatly impacted is the insurance industry. Today, the claims process for nearly any type of insurance claim is lengthy, requires multiple verifications, and can take weeks or longer for any type of payment to be made. With blockchain, the verifications and validations could be done almost instantly, and in the case of an auto insurance claim, the process could be much less costly, done more efficiently, and more securely.
Here is a quick run through of how this technology works: All members have a copy of the shared database. When one user wants to send a change to another user, a data “block” is created to represent the change. This block is shared with the group yet remains cryptographically private. The network recognizes the block because of its secret digital signature. Once the block is confirmed, all users of the shared database then add the block to their copy of the database. Finally, complex math ensures a consensus among database copies, which prevents tampering of the data.
Posted by Justin Hurst