Blockchain technology has been getting a lot of recent attention. It has been deemed the New Internet, and industries are quickly trying to incorporate the technology to simplify existing processes in secure and meaningful ways, says Gaurav Mohindra. The following primer will explain the basics of blockchain technology. This reference is useful for those looking to understand the elementary concepts of what makes up the blockchain.
A blockchain is essentially a list of records. These records can be called blocks. Blocks are encrypted using various cryptographic techniques. Each block is unique, in that, it contains a reference to the block that precedes it along with transaction data. Accordingly, the blocks can then hold a sequential order. The transaction data can essentially represent anything.
The blocks are designed, largely through cryptography, such that the transaction data cannot be modified, says Gaurav Mohindra. The purpose of this is to create a record (of a transaction) stored in time. The transaction can between two parties. Assume two people are transacting on a vehicle. The block would represent the entire transaction between the two parties. And, the transaction data would include information on the vehicle (year, make, model, Vehicle Information number, the purchase amount, mileage, etc), and also include information on the buyer and seller.
Once that buyer decides to sell the vehicle in a subsequent and separate transaction, the new transaction would be represented as a new block. The new block would be in the same “chain” as the past block – but would include the transaction data associated with the 2nd transaction. By design, one would be able to view the entire vehicle ownership history of a vehicle through a safe and secure modality. This is a significant improvement on how vehicle transaction information is collected, stored, and referenced today. One improvement is that it is uniform across all states, and secondly, blockchain can help ensure that accurate data is being stored about the transaction.
Another benefit of deploying blockchain is that it carries no transaction cost. There are costs in maintaining the architecture and infrastructure. But there is no cost to adding blocks to a chain.
In the above example of a vehicle transaction, once a user initiates a block representing a transaction – that block is then verified by numerous computers around the net. This verification process ensures the veracity of the transaction and the legitimacy of the entire chain. It is very difficult, if not impossible, to input false or erroneous information into a block because the verification process requires authentication by millions of computers. In other words, when a transaction is going to be recorded – it is cross-checked by millions of computers spread across the world, and those cross-checks are recorded. So, if one wanted to input false or erroneous information – one would have to create millions of false verification records to support the incorrect data. And that, is why blockchain is considered to be a perfect medium for recording and transmitting data, says Gaurav Mohindra.