Blockchain was originally created as a decentralized register of Bitcoin transactions occurring on the Bitcoin network. A decentralized or distributed database / book essentially means that the storage devices on which the registers are located are not connected to a common processor. The blockchain contains an ever-growing list of transactions in the form of blocks. Each block has a timestamp and then links to the previous block to become part of the blockchain.
Before computers, people kept their important documents safe by making many copies of them and storing them in impenetrable steel safes, buried treasures or bank vaults. As an added security measure, you should translate each of these documents into a secret language that only you will understand. So even if someone managed to break into your bank vault and steal your stuff, they wouldn’t be able to understand your mysterious messages, and you’ll still have a lot of backups stored elsewhere.
Blockchain puts this concept on steroids. Imagine being able to make copies of all your files, encrypt them with special software, and store them in each other’s digital banking vaults (computers) all over the Internet. So even if a hacker breaks in, steals or destroys your computer, they will not be able to interpret your data, and your network of friends still has 999,999 backups of your files. In a nutshell it’s a blockchain.
Special files are encrypted with encryption software so that only certain people can read them, stored on regular computers, connected together over a network or over the Internet. Files are called ledgers – they record your data in a certain way. Computers are called nodes or blocks – personal computers that share with each other their computing power, storage space and bandwidth. A network is called a chain – a series of connected blocks that allow computers to work together to share books with each other (hence the name, blockchain).
The social impact of blockchain technology is already beginning to be realized, and it can only be the tip of the iceberg. Cryptocurrencies have already raised doubts about financial services through digital wallets, the deployment of ATMs and the provision of loans and payment systems. Given the fact that today there are more than 2 billion people in the world without a bank account, such a shift is definitely life-changing and can only be positive.
Perhaps the transition to cryptocurrencies will be easier for developing countries than the fiat money and credit card process. In a sense, this is similar to the transformation that developing countries have undergone through cell phones. It was easier to buy a massive number of cell phones than to create a new infrastructure for landlines. Decentralization away from governments and control over people’s lives is likely to be accepted by many, and the social consequences can be quite significant.
It is only necessary to take into account a number of thefts of personal data that have hit the news in recent years. Transferring identification control to people would certainly eliminate such events and allow people with confidence to disclose information. In addition to giving vulnerable people access to banking services, greater transparency can also increase the awareness and effectiveness of charities operating in developing countries that fall under corrupt or manipulative governments. Increased confidence in where the money is going and who is benefiting will certainly lead to increased contributions and support from those in need in those parts of the world who are in desperate need of help. Ironically, but not in line with public opinion, the blockchain can build a financial system based on trust.
If we take it one step further, blockchain technology is well suited to eliminate the possibility of vote rigging and all other negative aspects related to the current process. Believe it or not, Blockchain can really solve some of these problems. Of course, with new technology there will be new obstacles and problems, but the cycle continues and these new problems will be solved with more sophisticated solutions.
The decentralized accounting register provides all the necessary data for accurate recording of votes on an anonymous basis, as well as verification of accuracy and whether there were any manipulations in the voting process. There would be no intimidation if voters could cast their ballots in the privacy of their own home.
Whether blockchain technology will become a part of everyday life remains to be seen. While inflated expectations have increased the possibility of the termination of central banks and their responsibilities as we know it today, the termination of the centralized financial system may be too far at the moment. Time will tell how the blockchain will develop, but one thing can be true today. The status quo is no longer an option, and changes are needed.