One of the greatest strengths of digital data is its nature. Bits and bytes can be copied practically effortlessly. In fact, the “copy and paste” function from the PC became one of the most requested new features in mobile devices, since users had become so accustomed to being able to take text or other data from one place and copy it elsewhere.
What is now of increasing interest to both developers and businesses is the advent of digital data that can’t be copied or altered. This is the key innovation that forms the foundation for the blockchain technology.
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The blockchain is an encrypted and list of information constructed in a standardized format. It is resilient because encryption is what connects each piece of information to the other and because the list itself is distributed in a peer-to-peer fashion.
Anyone in the financial services or legal profession will tell you the concept of an unalterable series of data records that can’t be tampered with has a multitude of uses in a huge number of industries. In fact, there is a high likelihood some uses of blockchain technology haven’t even been conceived of yet.
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Blockchain technology is most famously being used to support the digital currency called “Bitcoin.” The reason the technology is so well suited for this purpose is because a series of data records is the native format for a financial ledger.
Further, because of the nature of the peer-to-peer distrubtion mechanism, a blockchain-enabled ledger is fully transparent. Any “node” on the network of computers that has access to the blockchain can see and perform calculations on any of the transactions and verify their authenticity.
Unalterable and uncopyable data can be utilized to a significant degree outside of the financial services industry. For example, an attorney would be able to use blockchain technology to authenticate contracts. A court of law could use the technology to verify chain of custody for trial evidence, and to permanently lock a trial transcript so it can only be changed by an authorized party.
Because the list of transactions are all connected by the same encryption mechanism, changing one entry would require an attacker to unravel the entire chain and reconstruct it record by record. If the encryption is sufficiently strong, such a task would likely be impossible.
One of the most important priorities for technologies like blockchain is to educate users and developers as to its nature and features. This will provide all the stakeholders with a clear idea of how the new technology can be incorporated into their products, business models and community.