While Bitcoin has been slipping steadily in the consciousness of the mainstream masses, it’s “Blockchain” today that is the biggest buzz word. And, although people tend to compare these, Bitcoin and Blockchain are not the same.
Bitcoin is a digital crypto-currency and has been around for almost a decade. Blockchain is the technological concept that drives digital currencies such as Bitcoin. However, many more applications exist outside the world of crypto-currencies. So, what exactly is Blockchain and how can it be leveraged in different industries?
It’s not that easy to explain Blockchain in one simple sentence. A lot of definitions are floating around, so let’s have a look at a couple:
If you’re a person with an engineering background or walk around with a PhD. of computer science in your back pocket, these definitions might make some sense to you. But, if like me, the only thing in your back pocket is some chewing gum, it sounds like something Sheldon Cooper from the Big Bang Theory would say.
Let’s take a look at a practical example
Imagine you want to buy a house. Instead of going back and forth between the sellers and the notary, this process could be made much more efficient using Blockchain.
1. You request a transaction (you want to buy a house).
2. This transaction is sent to a network of computers, called nodes.
3. The network validates the transaction. It goes through all previous steps. It validates the existence of the house, the previous owners, the owners before that, all the way to those that first build the house. Only if all steps can be checked off, the transaction can take place. This eliminates the chance of any kind of fraud taking place.
4. The transaction is verified. A verified transaction can contain all kinds of “cryptocurrency”. Anything that has digital value, such as a contract, a record or any other valuable information. It checks if all previous owners were the legitimate owners, and whether you have all necessary documents and money to become the next legitimate owner.
5. Once each previous transaction is verified, a new block of data is created and added to the chain of all previous house owners, containing the information that you own the house. Now, this data is permanent and cannot be changed anymore.
6. The transaction is complete, congratulations, you just bought a house!
So, with the use of blockchain, all transactions are recorded, going back to the very first transaction, and without the possibility of being altered. It may sound complicated, but blockchain makes transactions better. Whether there are a thousand previous steps such as a supply chain, or only one single online transaction, everything is recorded.
Each transaction is put into a block, and every block is connected to the transaction before and after it, and all these blocks of transactions are blocked together. This created an unbreakable chain, a Blockchain.
Blockchain offers numerous benefits
Blockchain has a variety of uses in many industries. When starting new technology based projects, it’s certainly a good reflex to consider if Blockchain can play a role in it. And for digital analytics agencies like us, Blockchain will be inevitable. Validated data, transactional contracts or chained customer journeys are just a few examples.
Blockchain has a rapidly growing community and a huge number of Blockchain-related start-ups are popping up all over. It’s something that cannot be ignored anymore and has the potential to be one of the most transformative technologies of this century. And by now it’s clear that it’s on the verge of disrupting quite a few industries.
If you are not very familiar with it yet, it is definitely something worth investing your time in.