It seems like the whole tech world is abuzz about blockchain, from bitcoin fanatics to executives at major Wall Street institutions. But if you're scratching your head about what this new technology is or how it could help your business, remember blockchain is still in its infancy.
So, what the heck is blockchain? Imagine a massive, open, electronic ledger. Some folks like to envision an endless Excel spreadsheet — only this one is decentralized and encrypted, meaning there's no one authority with exclusive control over the ledger. This giant ledger can accept transactions from many sources, such as banks and asset managers. Because of this, an open consensus occurs for every transaction, and changes can't just be made on the fly, leading to a super secure environment.
"Blockchain is a very new technology. It's much like the internet was in the early '90s. We're just now starting to see people building applications and making it easier to use the technology," said David Gobaud, founder of Mobius, an API that makes it simple for developers to start using blockchain features.
Don't confuse blockchain with bitcoin
Bitcoin may be the first thing that pops into your head when you think of blockchain, but they aren't the same thing. The cryptocurrency bitcoin is just one example of blockchain technology in use, and perhaps the most popular mainstream example. However, bitcoin runs on blockchain technology; it's not synonymous with blockchain itself.
"Bitcoin is digital gold. People can track digital money, but blockchain is the underlying technology behind it," Gobaud explained.
While blockchain is still a very fresh technology, it's not just startups and high-tech companies that are embracing it. For example, in October 2017, both Mastercard and IBM began facilitating blockchain payments. IBM opened its own proprietary blockchain payment system, whereas Mastercard has opened a blockchain that accepts payments in local currency (no cryptocurrency accepted).
The benefits of blockchain technology
Blockchain technology offers a slew of benefits beyond cryptocurrency. Consider the way businesses keep data safe today: They typically strive to put up a wall around their data and secure it that way. Data is vulnerable – a variety of internal sources can touch the data and manipulate it, and cybersecurity continues to be a growing concern in general.
Therein lies the appeal of blockchain. Transactions that occur within blockchain can't be changed once they're written – that is unless the majority or all of the computers in the blockchain give the go-ahead. This cuts the risk of backdoor transactions and significantly reduces the risk of security breaches. But it's not just the financial sector that has something to gain from this technology. Industries such as healthcare, law, government and defense are currently strategizing ways to leverage this technology to create ways to protect data and automate safe data sharing.
Want to learn more?
If you want to learn more about blockchain, here are two beginner resources to kick off your exploration:
- Blockchain simplified: This video walks you through blockchain step by step. You'll receive a video explanation of the fundamental concepts behind a basic blockchain transaction.
- How it works – minus the technical details: This article takes you through the blockchain using everyday concepts and includes helpful visuals.
"Things are progressing very quickly with blockchain," Gobaud said. "I look at data as though it's the new oil. Blockchain is like the NASDAQ for data."