From cruise height, the blockchain may not look different than you know, says Wikipedia.
With blockchain, many people can write records into a record of information, and a community of users can control how the record of information is revised and updated. Also, Wikipedia values are not the product of a single publisher, and no one controls the information.
Descending to the ground level, however, the differences that make the blockchain technology unique become clearer. While both operate on distributed networks (the Internet), Wikipedia is built into the World Wide Web (WWW) using a client server network model.
A user (client) with privileges associated with their account can change the Wikipedia entries stored on a central server.
Each time a user accesses the Wikipedia page, he will receive the updated version of the Master Copy of the Wikipedia entry. Control of the database remains with Wikipedia administrators that allow access and permissions to be maintained by a central authority.
Wikipedia’s digital backbone is similar to protected, centralized databases that governments or banks or insurance companies now maintain. Controlling key databases rests with their owners, including managing updates, accessing and protecting against cyber threats.
The distributed database created by the blockchain technology has a fundamentally different digital backbone. It is also the most prominent and important feature of blockchain technology.
The “master copy” of Wikipedia is edited on the server and all users see the new version. In the case of blockchain, each node on the network reaches the same conclusion, each updating the record independently, with the most common record becoming the official record de facto instead of being a master copy.
Transactions are broadcast, and each node creates its own version of events.
This difference makes the blockchain technology so useful – it represents innovation in information logging and distribution that eliminates the need for a trusted party to facilitate digital relationships.
However, blockchain technology, for all its advantages, is not a new technology.
Instead, it is a combination of proven technologies to implement in a new way. It was a certain orchestration of three technologies (the Internet, private key encryption and incentive protocol) that made the creator of Nakamoto Satoshi bitcoin an idea so useful.
The result is a digital interaction system that does not need a trusted third party. The work of securing digital connections is implied – provided by the elegant, simple but powerful network architecture of the Blockkin technology itself.
Set up digital trust
Trust is discretion among different parties, and in the digital world, trust often involves proof of identity and verification of permissions.
Simply put, we want to know, ‘Are you who you say you are?’ And ‘Can you do what you’re trying to do?’
In the case of blockchain technology, private key encryption provides a powerful ownership tool which fulfills authentication requirements. Holding a private key is a cost. It also saves a person from having to share more personal information than they would need for exchanges, leaving them exposed to hackers.
Verification is not enough. OK – having enough money, broadcasting the right transaction type, etc. – needs a decentralized, peer-to-peer network as a starting point. Distributed network reduces the risk of corruption or central failure.
This distributed network must also be committed to the records and network security of the transaction. Approval of transactions is the result of the entire network applying the rules on which it was designed (protocol blockchain).
Authentication and approval provided in this way allow interactions in the digital world without reliance on trust (expensive). Today, entrepreneurs in industries around the world have awakened to the consequences of this development – unimaging, new and powerful digital power are possible. Blockchain technology is often described as the backbone for the transaction layer for the Internet, the basis of the Internet’s value.
In fact, the idea that cryptographic keys and shared accounts can incentivize users to secure and formalize digital relationships. Everyone from governments to IT companies and banks wants to build the transaction layer.
Authentication and approval, essential digital transactions, are determined as a result of the configuration of the blockchain technology.
The concept can be applied to any need for a reliable system of record.