Blockchain was initially created to be a decentralized library of Bitcoin transactions that take place within the Bitcoin network. A decentralized or distributed database / library basically means that storage devices, where libraries are located, are not connected to an ordinary processor. Blockchain has a growing list of transactions through blocks. Each block is timed and then linked to the previous block to become part of the block chain.
Before computers, people kept their important documents safe, making many copies of them and storing them in impermeable steel boxes, buried treasure chests, or bank vaults. As an additional security measure, you would translate each of these documents into a secret language that only you can understand. That way, even if someone manages to break into your bank vault and steal your stuff, they won’t be able to understand your cryptic messages, and yet you’ll have plenty of backups stored in other locations.
Blockchain puts this concept on steroids. Imagine that you and millions of people are able to make copies of all your files, encrypt them with special software, and store them on each other’s digital banking repositories (computers) all over the Internet. That way, even if a hacker enters, steals, or destroys your computer, it can’t interpret your data, and your network of friends still has 999,999 backups of your files. That’s a short blockchain.
Special files, mixed with encryption software, can only be read by a few people, stored on ordinary computers, connected over the network or over the Internet. Files are called books – they record your data in a specific way. Computers are called nodes or blocks: personal computers that share processing power, storage space, and bandwidth with each other. And the network is called a string – a set of connected blocks that allow computers to work together to distribute books to each other (hence, blockchain).
The social impact of blockchain technology has already begun to materialize and this may be the tip of the iceberg. Cryptocurrency has already raised questions about financial services through digital wallets, the expansion of ATMs and lending and payment systems. Considering that there are now more than 2 billion people in the world without a bank account, this change is life-changing and can be positive.
Perhaps the change in cryptocurrencies will be easier for developing countries than the fiat money and credit card process. In a way, it is similar to the transformation that developing countries have undergone with mobile phones. It was easier to get large quantities of cell phones than to provide new infrastructure for landlines. Decentralization away from governments and control over the lives of people will take over a lot and social implications can be quite significant.
The wave of identity thefts that has hit the news in recent years should be noted. Giving people control of identification would certainly eliminate these incidents and allow people to display the information with confidence. In addition to providing access to non-poverty banking services, greater transparency can also increase the profile and effectiveness of charities working in developing countries under corrupt or manipulative governments. Increasing the level of trust in which money is channeled and for whose benefit it would lead to greater contributions and support in places in the world that are in dire need of assistance to the poor. Ironically, and not in line with public opinion, blockchain can build a financial system based on trust.
Taking it one step further, blockchain technology is well positioned to eliminate vote opportunities and all other negatives associated with the current process. Believe it or not, Blockchain can solve some of these problems. Of course, new obstacles and problems will come with a new technology, but the cycle goes on and these new problems will be solved with more sophisticated solutions.
A decentralized book record would provide all the necessary data to accurately record the votes anonymously and to verify the accuracy and manipulation of the voting process. There would be no fear of voters being able to vote in the privacy of their own homes.
It remains to be seen whether blockchain technology will become a part of everyday life. Although inflated expectations raised the possibility of an end to the central bank and the responsibilities we know today, the end of the centralized financial system is perhaps a step in the right direction so far. Time will tell how the blockchain will evolve, but one thing is for sure today. The status quo is no longer an option and change is needed.