Blockchains Explained: Information Storage for the Digital Age…

Blockchains Explained: Information Storage for the Digital Age…

In this digital internet connected age being able securely store information has never been more important and it has never been more difficult with hacking, digital copies and high-tech crime being rampant. Being able to hold and securely maintain trusted information is a major concern and one that can no longer be addressed through the old techniques which are all descended from writing an entry in a book and blindly trusting third parties.

As the Bitcoin revolution rolls on Blockchain technology that allows this virtual currency to operate securely is the answer to these issues. Blockchain is transforming the traditional ways of storing trusted information and knowledge, removing the requirement to trust institutions and replacing the middle man with a secure and unchangeable system. This is information storage for the digital age, this is the blockchain.



The evolution of information and how we store it has until recently stemmed from the recording of that information into books. Often a single book was maintained to contain a single source of truth. A structure that required you to trust the holder of that book. If a copy of this book was required the replication of this information often led to variations and subtle changes, Chinese whispers. This made it very difficult to tell what information was correct and lacked the ability to tell the sequence of these changes. The bible is probably one of the greatest examples of this in action. Typically, the longer a book of knowledge has existed the more it has been copied and the more variation will occur, and the more confusion will ensue. Technically not a very secure or sensible way to maintain information.

This weakness is even more apparent, and dangerous, when it comes to valuable information that requires us to trust its accuracy. Information such as your bank balance and transaction history can change your life if it suffers Chinese whispers or is changed by unscrupulous individuals.

Up until the creation of Bitcoin valuable information was held by institutions that we trusted, typically called trusted third parties.  Sadly, these trusted third parties still suffered the same structural problems that have always existed. Even with the advent of computers this single private book or ledger way of keeping information remained but the ledger itself became a single private secure database.

Creating and holding trusted information is the core purpose of the blockchain, it creates a mechanism that ensures information held within it is secure and fully traceable. While Bitcoin was created for a specific purpose, to replace our centrally controlled system of monetary exchange, trade, blockchain technology is almost limitless in its application. Anywhere that you need to trust information, and the history of that information, blockchain can be applied and replace the blind trust of third parties. Trade, legal documents, agreements, even knowledge itself will be effected by this transformative technology in the coming years.

The blockchain changes the fundamentals of our old ways of keeping information by taking the opposite approach. It ensures information remains accurate and secure by making many identical copies of the information and spreading it across a large number of servers, also called nodes. The information is available to all nodes, said to be public to the network of servers but not to the general public. Now it can’t be changed in just one place, all nodes of the network must approve and record a transaction before it can be considered approved. This also ensures all copies of the information are kept in sync as new information is added. Known as an append only ledger it lets you add information to it, in Bitcoins case transactions between parties, but at the same time the ledger guarantees that past entries can’t be changed.

Each transaction or entry in a blockchain receives its own identifying number or hash that is related to the previous transactions hash, creating a sequence or block in a chain, hence the name blockchain. This encrypted number also ensures security as you would need to alter the record you wish to hack and all of the hash’s that came after it in order to keep the chain sequential.

On top of these simple structural changes to how the information is organised there are a number of clever encryption technologies laid over the top that would require all nodes to be hacked, and encryption codes cracked, nearly simultaneously in order to hack the ledger.

Blockchain technology is only in its infancy, all major financial and legal institutions are looking to make use of blockchains in order to secure the information their customers need to trust. Everything from their own company ledgers to their customers accounts. And this is only the tip of the iceberg, anywhere that multiple parties need to access the same information and be able to trust it is accurate will be transformed by blockchains. Your passwords and digital footprint on the internet will eventually be stored using blockchain technology, in fact all knowledge will eventually be stored in blockchains.

 

Reference: Blockchain (Wikipedia)
Reference: Bitcoin
Reference: Bitcoin Guides