The advantage of this technique is that it is not tied to a central institute, such as a national or European bank. For example, blockchain can include transfers like those done at a regular bank. It may also contain title deeds, contracts, arrangements, personal messages, production processes or other data.
Countries are therefore busy investigating this new form of ‘value’ and especially security. The blockchain guarantees the integrity of the value because a multitude of computers is involved in capturing the blocks in the chain. We have known this phenomenon for a long time on the basis of the term ‘peer to peer’ network.
Every change in the chain must be accepted by all parties involved (nodes in professional language). Anyone using the blockchain can view all data. This makes blockchain technology extremely transparent. You can track and control transactions throughout the chain. In addition, there are a number of fixed rules that transactions that take place via the network must comply with. If the transaction meets all the rules, it will be approved and included in a new block. If not, the chain will continue to exist in the old form; and the value too.
The data is stored in so-called blocks, which are lists of transactions or other data. The first block of the chain is the Genesis block. That block is concluded with the unique hash of all data in the relevant block. In the next block, the hash of the previous block is included, so that the blocks refer to each other and a chain is created.
A blockchain is a distributed database or a distributed register. So, it does not exist, as said before, in a central location. If we call this register a file, it will become easier again and we will immediately call it distribution. You can then split that shared file into blocks or, rather, into sections. And if every block is a rubric, you can only add a rubric to the file.
Now it comes: there are thousands of copies of a file. That file is stored on home computers and business servers all over the world. This file can be used to record many things, such as sending and receiving money. When I send money to Marco, a new section (ie block) is created for the specifications of that transaction. This section is then sent to hundreds of other computers that have a copy of the document.
Those computers confirm that this transaction is authorized and, before the section is approved, they must agree that the transaction is legitimate. It should fit perfectly on every copy of the file. You can compare it to a few hundred friends around Marco and me who all saw that I gave Marco the money in question. They all agree that I really gave him the money and they also agree that the correct amount was given.
The genius of this shared file is that it does not involve a bank or centrally managed company and that you do not have to put your trust in a financial institute. No intermediary is needed in any way at Blockchain. If Marco deposits the money back to me, a new section will be created. The file cannot be changed because nothing can be deleted. Every transaction has a new heading.
This chosen technological design makes it impossible to falsify a section in this shared file. If someone who has a copy of the file on their computer tries to falsify it, those changes would be rejected by the many other computers used in the verification process. All blocks in the chain refer to each other. The first block contains information about the object in question, for example, a work of art or a house. In the subsequent blocks, reference is always made to the first (Genesis) block, so that it can be determined that the information is correct. All blocks in the chain refer to the previous block.
For example, blockchain is a virtually waterproof technology.
The whole goal of Blockchain is that people can share valuable data with each other in a safe way, without any manipulation. Blockchain stores data using sophisticated mathematical innovative software rules that are extremely difficult for hackers to manipulate. Of course, nothing is impossible. But it takes such an effort to hack a blockchain that the chances of success are nil. It takes the computing power of a supercomputer or quantum computer to potentially hack the blockchain. And the latter type of computer still has to be developed considerably before it can be used at all.
Many companies and governments are now investigating the possibilities of blockchain technology. Governments have other interests since they are centrally organized. Central organizations derive a dominant position from that central function. Think of the national banks or the European Central Bank; Crypto coins are by definition a threat to, for example, the Euro or the Dollar. And so for the dominant position.
Before governments will embrace digital currencies, an alternative dominant position will have to be acquired. Nobody voluntarily hands overpower. In addition, you can think of central databases of the National Road Traffic Service (RDW) with the vehicle registration, the Tax and Customs Administration with the complex automation that must meet the varying regulations of the four-year governments. There are actually a lot of central databases that automatically have a dominant position.
Blockchain has the potential to unleash a true paradigm shift, in ICT and especially socially. Responsibility with the customer/citizen for the correct information, never outdated files, no large amounts of data in one pile and much less vulnerable to hackers and criminals.
Social Media and Blockchain
The position of the large Tech companies has been under discussion in recent years. Large data breaches, such as Cambridge Analytics, and the use of so-called trolls to manipulate public opinion, made it somewhat clear what a company like Facebook is capable of. That led to an ‘interrogation’ of the top man in the United States Senate. Google was repeatedly punished with billions of fines for unfair competition. All consequences of huge central databases with which companies can freely express what they want. After all, who controls them?
Facebook recently came up with the plan to market its own digital currency, the so-called Libra. Soon all kinds of forces started to put a stop to this. Facebook now has a very powerful position in everyday life. Billions of users and possibly future users of the Libra are a global threat to a variety of national currencies. In addition, it is completely unclear what Facebook actually stands for, what vision the company has and what it wants to achieve in addition to making maximum money.
Blockchain as a Secure Decentralized Database
Blockchain technology in itself is extremely interesting for many companies. After all, you no longer need a central, large, cumbersome and expensive computer center, while the security of the data is even better. Because the European GDPR directive – the General Data Protection Regulation – came into force in 2016, potential data leaks are a major concern. It also contains tough sanctions. Central databases have therefore become an extra source of concern and their security is an issue and problem in itself.
Blockchain Technology Unique
The simplest answer is to use blockchain technology. As far as data security is concerned, it is the ultimate solution. Data breaches will be a thing of the past. A central database is no longer necessary. It is a completely new generation of automation; some say as big a change as the emergence of the Internet. However, switching from the central database to a blockchain is no easy task. This requires an intensive switchover that is technically feasible. However, as with any change, the problem is mainly in the upper rooms of the managers and boards of directors. It costs money, time and effort and above all a lot of effort to relinquish the ‘dominant position’.
Advantages Blockchain Saving
Transactions in customer data via the blockchain and giving control to the customer entails the following important advantages:
- The quality of the data improves and is always up to date;
- Privacy is better protected;
- Less prone to hackers;
- Less to no intermediaries needed;
- Less manual processing of changes in customer data and fast transactions in most organizations;
- Lower costs
The blockchain will increasingly become the standard, whether it be transactions of money, contracts, DNA profiles or name, and address data, or products, artwork, photos, videos, cars, planes, intellectual property, stamps or whatever. Nothing is impossible or unthinkable.
Another example of a blockchain application is the management and storage of personal data. Instead of having to send 85 address changes to all kinds of authorities during a move, for example, you enter your data once in your personal blockchain. You make the data temporarily available to the authorities, who are thus informed about your move. Save you and the authorities a lot of time and effort. That is if the authorities want to cooperate.
Your personal data, for example, also contains your medical data.
Nowadays you can have a DNA scan for an increasingly lower amount to identify dormant health risks. The customer gets his DNA profile on a USB stick or it is in the cloud. If he wants to have his data checked by a hospital, he must send the data. However, where and how does the hospital store this data? And how do they protect that personal data?
Storing the DNA profiles via the blockchain offers much more security. Everything is safe and fully encrypted in the blockchain and the customer remains in control of his data. If he wants to give hospital access, he gives them access to the data for a limited number of days. In this way, the information remains in one file, which can be inspected without having to share/duplicate the information.
Blockchain’s promises of transparency, decentralization, and immutability are a necessity in a world where trust in centralized organizations is a major and growing concern.
Threats to privacy and security threats loom in the digital world. Only Blockchain, or something similar, can solve this problem. As the blockchain technology is still in its infancy, major shifts cannot be expected to occur in the short term. Switching from a large company’s central administration to blockchain is a major effort. In contrast, new companies and startups will try and test the applicability of blockchain. If only to guarantee the security of data and, above all, to reduce costs.