Blockchain is a technology that has the potential to become a disruptive force in the ever-more digital economy. Its potential value — coupled with friends, clients and business partners asking about it — led me to publish this outline and answers to many of the questions I’ve been fielding. It’s something every Data Athlete will want to understand.
Blockchain Starts With Bitcoin
Blockchain is essentially a distributed database, which means it’s like the database you know that lives on your server or in the cloud — except that it’s spread copies of itself around the Internet or network. A distributed database has the benefits of fault tolerance and transparency — more than one “node” on the network has a copy of the data. Blockchain also utilizes strong cryptography that prevents changes to the transactions content — they are permanent.
These characteristics were developed to support the exchange of Bitcoin, the now famous crypto-currency that is being used worldwide to facilitate a myriad of transactions.
Bitcoin is said to concern banking institutions and governments alike — as its decentralized nature means no one nation owns or controls it. Bitcoin and its underlying Blockchain are like the “MP3 of currency” in the early ’90s. Bitcoin.org summarizes the power of its decentralization:
“Sending Bitcoins across borders is as easy as sending them across the street. There are no banks to make you wait three business days, no extra fees for making an international transfer, and no special limitatons on the minimum or maximum amount you can send.”
So in order for Bitcoin to be a “free” and universal currency, it could not be centrally managed or controlled; hence, blockchain was created first — Bitcoin actually started the following year.
Furthermore, each and every Bitcoin has a copy of every transaction/exchange it was ever involved in. All of the data on that chain is distributed to every blockchain-distributed journal (or database) across the Web.
What Is Blockchain Used for Today?
Blockchain’s most prevalent usage is in Bitcoin. But remember, it’s an encrypted, distributed database. And so, blockchain technology also securely moves and stores host money, titles, deeds, music, art, scientific discoveries, intellectual property and even votes.
As a (distributed) database that is as open, borderless and secure, blockchain continues to find new uses, and has been adopted by every major technology company. IBM, for example, made an early investment in blockchain technology and IBM Blockchain.
“Blockchain technology also securely moves and stores host money, titles, deeds, music, art, scientific discoveries, intellectual property and even votes.”
Blockchain 2.0 — Triggered, Programmatic Transactions
Blockchain 2.0 is the rapid evolution of blockchain, and where blockchain offers the potential for transformation of the way we engage in commerce and business at an Internet scale.
Remember, blockchain is a distributed, cryptographically secured database. It makes sense that an evolution would allow programming code, or chain code, to manipulate the transactions in a blockchain — and that’s exactly what has happened.
In one example, SAP is using blockchain software to let patients share electronic medical records with doctors or drug makers for a specific time period, such as during medical care or a study.
In another example, they designed a system for farmers’ weather insurance. It pulls rainfall data from sensors in the field, then automatically informs insurers if there’s a drought that would trigger a payout.