WE have heard it a lot. ‘Blockchain’ is the buzzword thrown around frequently when the future of technology is discussed. From a high, zoomed-out level, Blockchain may appear similar to any other information recording system, but at closer glance, it becomes evident that it is a transforming technology.
In a recent survey conducted by the World Economic Forum, the majority of the senior executives within the information and technology sector expect that approximately 10% of global Gross Domestic Product (GDP) is likely to be stored on the blockchain by 2026.
What is Blockchain Technology
For the uninitiated to the landscape of the latest technology, you might have heard about Blockchain in reference to cryptocurrencies, most recently, Bitcoin. In essence, Blockchain is the underlying element of all cryptocurrencies. Cryptocurrencies such as bitcoin pioneered blockchain technology.
Blockchain can be defined as a form of decentralised, Distributed Ledger System (DLT) wherein transactions are stored in bits and pieces across a mesh of distributed systems, as opposed to a centralized system. It is a kind of distributed database that leverages cryptography to provide a decentralised concurrency control mechanism and to maintain consensus. It is also an interlinked and continuously expanding list of records stored securely across a peer-to-peer network.
To fully understand the key features of the blockchain, we need to first de-construct the hype and dive into the nuts and bolts.
Here are a few features of the Blockchain technology that will help you understand it better:
• Append-only - Blockchains can only be appended with new data. Which will then be chained together with previous blocks of data. Any previous data is stored in blocks and cannot be changed, edited, or readjusted.
• Consensus-driven - Anyone wanting to add a transaction to a Blockchain must compete to solve a mathematical problem. Since Blockchains are a network of computers, the results of these proofs are shared with all other computers in the system. When every node agrees to the solution, a transaction is successfully added.
• Decentralized - No single entity (person or institution) stands in charge of the data on a Blockchain. Therefore, the power to edit and change information is decentralised. So Blockchain is decentralized ledger distributed among the computers (nodes) in its network. These nodes share responsibility for maintaining entries in the ledger. Nodes in a blockchain network constantly refresh each other with the most recent version of the ledger as new blocks are created.
• Transparent - Blockchains can be viewed and verified for their contents by anyone in the network. Therefore, anyone in the system can corroborate and confirm that the events that are recorded, factually took place. This results in improved tracking and traceability
• Immutable - Once a block is created, it is linked to all the blocks that come after it. Altering a block will unchain it from the subsequent blocks. In order for an altered block to be accepted by the rest of the network, it needs to be chained to the subsequent blocks again. Blockchain Immutability is especially useful for managing contractual relationships or tracking transaction histories.
Are Blockchains Safe and Secure?
The Blockchain technology is the future of cybersecurity, experts believe. It has seeped into all industries including banking, healthcare, finance, and so on. Cybersecurity experts such as Alex Momot believe that by taking the human intervention out of the ledger management system, Blockchain offers to mitigate the risk of human errors — one of the most significant causes of data breaches.
Blockchains can be used to store any data securely. Its very fundamental structure introduces security to transaction and data management.
In today’s digital age, cybersecurity attacks have risen to alarming levels. The year 2018 witnessed cyberattacks that hit billions of people. Cyber attacks in 2018 increased by 32 % in the first three months of the year as compared to the same period in 2017.
This steep rise in security breaches call for innovation and transformation in the way security of data and application is handled.
Detailed below are a few reasons why Blockchain is the future of cybersecurity:
• Blockchain maintains transaction records as immutable, meaning there is no way for a single person or entity to modify the contents of a transaction.
• The blockchain is decentralized, meaning no one person has the authority or right to mess with the information already present in records.
• Since data is stored across multiple nodes, for a hacker to steal it, they would have to access more than just one computer, making the job complex enough.
• Blockchains eliminate the need for human intervention- the most significant reason why breaches take place.
• Data stored in the Blockchain is made secure and immutable using cryptography. Each block gets referenced by a unique string of characters, generated by a cryptographic hash function. This function can accept any amount of data as inputs and generate a fixed length string as output. This fixed length output is known as a hash. Each block links to the previous block (known as the parent block) by storing the hash of the parent.
• As data gets stored in blocks and referenced by their hash, it remains content-agnostic. Since the blocks are ordered by their reference to previous block hashes, instead of being ordered implicitly by a numbering system, it is now more difficult to influence and manoeuvre an existing order of transactions. Consequently, data integrity remains intact and protected by design.
Blockchains present a promising solution to the problem of increasing cybersecurity breaches. Blockchain, experts believe, is only in its nascent phase right now. The distributed ledger technology will help countries replace legacy government systems by digital ones. It is also predicted that by 2030, a majority of the world trade will be conducted by leveraging the Blockchain technology. While blockchain has the potential to become a dominant technology, if it is to revolutionize our global environment, it will need to be deployed in the right areas.
By Raghav Khullar
The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Al Bawaba Business or its affiliates.
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