The Basics of Blockchain Technology

Everything you need to know about blockchain technology

Blockchain is one of the biggest buzzwords in technology right now. Almost everyone knows the term, but not everyone understands what it means and what the fuss is about. In the simplest of terms, blockchain is a series of data records (blocks) bound together by cryptographic principles (chains). What makes it buzzworthy is the underlying principles and characteristics of the technology.
1. Decentralised
Blockchains are not owned by any single entity. They are shared by a community of users who can read, write and access information in the blockchain directly, without having to go through a central authority. Unlike typical Internet applications where a single master copy sits on a central server, blockchains are distributed ledgers where multiple nodes on a peer-to-peer network carry the same master copy.

Why does this matter? Centralised systems hold all information in one place, which increases risk. For one, it makes them prime targets for malicious attacks. Even in more innocuous situations, centralisation is still risky because if the system shuts down, everyone loses access; if the system is corrupted, all its data may even be irretrievably lost. In contrast, since the same blockchain data is hosted on multiple nodes, even if one node is shut down, the rest are still available. 

2. Fully Transparent
Blockchains are public records, open for anyone and everyone to see. Any changes or additions to the blocks are broadcasted. When all users agree to accept and record the data on the blockchain, every node on the network updates its record independently. This means that users know where the data came from and how its ownership has changed over time.

Why does this matter? Blockchain manages to combine the anonymity of the Internet with the transparency needed to facilitate trust. Every blockchain user’s real identity is securely masked by their public address, which protects personal privacy. In addition, because every transaction made is recorded under their public address, there is an added level of accountability. 

3. Immutable

After data has been recorded to the blockchain, it cannot be modified. The records are tamper-proof to the point that some advocates describe blockchain as ‘virtually unhackable’. Each block that is added onto the chain carries a hard, cryptographic reference to the previous block. Altering a single block (which is tough enough, as they are encrypted) requires the alteration of every earlier block, of which there may be millions.

Why does this matter? By making records tamper proof, the risk of fraud is dramatically reduced. 

Blockchain was invented by a person (or group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin. While it may have had its start in cryptocurrency, the world has since found many uses for blockchain technology, especially in the travel industry.


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