Blockchain technology is the largest invention of the internet so far. The diversity of using the concept is huge and yet only a very few people know what’s behind this idea. Fact is, blockchain will change our lives – to whatever extent. A good point to take a closer look at the concept.
The same applies to the so-called blockchain technology. Let’s face it and find out in which parts of life the new technology is already relevant?
Blockchain – what’s behind?
What’s special about the chain: The list of data records is linked together by encrypted information. In technical jargon this means that each block contains a cryptographically secure hash (i.e. a specific string) of the previous block. This hash works like a postmark on letters: it assigns a specific event to a unique time.
Protecting large amounts of data – what makes blockchain so secure?
How safe a blockchain is from unauthorized access is also illustrated by the following example: imagine an intruder is gaining access to a bookstore and tearing a page out of a book of Harry Potter. His aim: He wants to destroy the page completely. He acts like a hacker who invades the computer to manipulate a record. At this point, it turns out, that a torn out page or a manipulated data set has no effect. To reach his goal, he would have to tear the page out of all Harry Potter books in the bookstore – and beyond that out of the books in the whole city, throughout Germany and around the world. Just as the hacker who has to infiltrate all computers. Another hurdle: This process would have to happen everywhere at the same time. The system – in this example, the booksellers – would notice the missing page and simply replace the damaged books and restore the old state.
Blockchain in everyday life
An example from contracts. A startup called slock.it developed a way to rent a bike through the blockchain. This is how it works: The tenant is simply stored in the chain as a record and gets through that the right to unlock a bike. The owner and the tenant don’t conclude a private contract with each other, as usual. In the digital world, a smart contract is deposited in the blockchain, which is visible to all participants. It can track who has access to the vehicle and who shouldn’t – the system becomes a supervisory authority. A notary or written contracts on paper become superfluous. Another advantage: Even if all processes are visible, the topic of data protection is no problem, as each user remains anonymous and exists as a code of numbers and letters.
The principle of digital leases can be applied to other parts such as car or apartment leasing and even for sales contracts. If a payment system is used at the same time, all digital cash flows such as rent or deposit can be logged in detail and assigned directly to the contract. This ensures that all important information is secure and yet anonymous.
This is just one example how the decentralized blockchain technology can optimize existing processes, bypassing key players and control units. The development of further systems in parts of health and finance, on real estate market and even in polity are running on full speed. It will take some time before the system will become a central currency or can be used to organize a state (such as in Estonia). One thing is clear: in the future, blockchain can influence all parts of life.