Within just a few decades of its invention, blockchain technology has had a profound impact on many aspects of life. It’s been the keystone that’s enabled us to start decentralising our finances, our data, and more. As the co-founder of Ethereum Vitalik Buterin said: “Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly”.
Despite the many changes blockchain technology has already made, and the massive potential for more, the average person probably won’t be able to tell you exactly what a blockchain is. So what is it?
What is a Blockchain?
Blockchain is a type of distributed ledger technology (DLT) that enables the secure, decentralised transfer of digital information and assets. It’s often referred to as a “digital ledger” because it allows transactions to be recorded chronologically and publicly like a traditional ledger, but is automated and digitised for the modern age.
Each transaction is verified by consensus among a network of computers, and once a block has been filled, it’s closed off and becomes immutable. The next block in the chain is then opened. This makes it impossible to alter the Blockchain without the consensus of the majority of the network.
Blockchain Technology and Crypto
One of the main selling points of cryptocurrencies is that it’s decentralised and isn’t subject to control by any government or financial institution. Add in the security offered by blockchain, and it becomes the perfect technology to host cryptocurrencies. The vast majority of them are based on a blockchain ledger.
The blockchain also plays a key role in the release of new Bitcoin and other cryptocurrencies through mining. A bitcoin miner is someone who, by solving complex mathematical problems, essentially audits a block in the ledger, and receives newly minted bitcoin as payment.
It’s largely thanks to crypto that blockchain use has grown so much in recent years. With the explosion of cryptocurrencies such as Bitcoin and Ethereum, blockchains have moved into the spotlight, as the wider community begins to understand them and their potential.
Blockchain Technology in Business
While blockchain is currently most associated with crypto, it is also being used by many global businesses to deal with real world problems. Currently, over 80% of the top 100 global businesses are utilising blockchain technologies in some ways, including:
- IBM and Walmart – using blockchain to improve their supply chain logistics.
- Ford, General Motors and BMW – a consortium of car manufacturers have teamed up to investigate how blockchain could benefit the automotive sector. Some of their aims for blockchain are to improve self-driving car capabilities, and enable safe data sharing and payments.
- NASDAQ – investigating how blockchain can be used to power a more secure voting system that reduces the chance of voting fraud
- Amazon – As an extension of its AWS, users can develop and run apps on the blockchain ledger
- JP Morgan – uses a blockchain ledger to reduce the time and cost of financial transactions
What does the future hold?
Within less than fifteen years of its first application, blockchain has had an impact on a wide range of industries. But one of its biggest applications could come with the arrival of Web 3.0, the next generation of the world wide web.
Many of Web 3.0s dApps will be hosted on the Ethereum blockchain, which will allow people to engage without consenting to having their data monetised or censored by third parties . This is just one example of how Web 3.0 will utilise blockchain technology, but it’s clear that the use case of blockchain will only increase in the next few years.
Despite being a relatively new breakthrough, blockchain technology has enabled the revolution of finance through cryptocurrency. Not only that, but it’s being used by some of the world’s largest companies to solve real world problems.
The future looks bright for blockchain, with the imminent arrival of Web 3.0 being just one example of a large-scale application of blockchain technology.
Disclaimer: Nothing within this article should be misconstrued as financial advice. The financial techniques described herein are for educational purposes only. Any financial positions you take on the market are at your own risk and own reward. If you need financial advice or further advice in general, it is recommended that you identify a relevantly qualified individual in your Jurisdiction who can advise you accordingly.