Blockchain has come long way, in last eleven years. From a technology underpinning crypto currencies, to a technology which can disrupt the way transactional commerce takes place. Large Tech companies like Intel & IBM have contributed heavily to this technology and offered their work in public domain. Hundreds of large corporations have started working on this technology. Many have rolled out projects & some are working on pilots. Many more have announced their intentions.
Blockchain has write-only type of data structure which resides across multiple computer devices (either intranet or internet), generally spread across locations or regions. It includes technology to store data in the form of Blockchain with time stamp & smart contracts. Bitcoin Blockchain is different from the successive iterations, in terms of technologies such as shared computational power along new sets consensus algorithms. In summary, Blockchain consists of three basic components:
- A data model that captures the current state of the ledger
- A language of transactions that changes the ledger state
- A protocol used to build consensus among participants around which transactions will be accepted and in what order, by the ledger.
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In Blockchain every new block (A block refers to a set of transactions that are bundled together) gets added at the end of the ledger. Each block is time stamped, which is another unique feature. Every block has a reference to previous block within a cryptographic key – hash. Immutability of transaction for some could be a great security feature but for cynics, it would be a drawback.
To some “Blockchain” is disruption in Fintech, which is not the case. It is by no means a low cost alternative to some existing business models, processes or products. However, it has potential to change the way people transact. It can cause a shift in paradigm for political, social and economic systems. While it has a potential of great impact, it will be gradual, probably spanning over couple of decades, before blockchain occupies our day to day transactions. For wider reach of the technology, it will be imperative for all stake holders to come on board. No Government, Corporation or intermediary should feel threatened.
In times to come, trust in the intermediary will be replaced with trust in the underlying code and consensus rules. This technology has been and will be extremely effective in Governance, Provenance, Public Health, e-Commerce, Supply Chain Management, Construction, Manufacturing, etc. apart from Fin-tech. Social sector initiatives involving crowd funding, can be an effective use case for Blockchain.