What is Blockchain?
Blockchain is a technology. It is not a solution on its own, in the same way as electronics, coding languages and the world wide web on their own are not solutions. The solutions come from how the technology is applied. There has been confusion on this point. Too much has been written about how blockchain is the answer, rather than a technology which could be utilised to come up with a potential answer.
Blockchain is a secure, robust database
At its heart, blockchain technology is a distributed secure database. It has three key features which make it appealing:
Distributed: The database has identical copies in multiple locations. Any update to the database requires validation from a majority of these and then results in all locations being updated. The distributed nature means that it is highly resilient (loss of one location copy isn’t a big deal) and very secure (high difficulty to fraudulently change multiple copies than it is to change one copy).
Secure: The database is highly secure. It utilises Cryptographic keys to make it difficult to hack and benefits from ‘processing integrity’ (i.e. database can only be updated when the right credentials/keys are applied and the majority of computers/locations used by the blockchain validate these).
Auditable: The database is effectively stored in ‘blocks’ of data joined in ‘chains’. In this construct, the full history of the data is kept so you can see what changes have occurred.
So why all the excitement?
The excitement for blockchain is in its ability to provide a database solution which is so secure that it enables a previously impossible level of trust and data sharing between different parties . Cryptocurrency is a good example. The security element is what makes this now possible more than anything else.
Potential use cases all centre around the trust aspect. It can be used for supply chains, for instance, where different parties in the chain can more easily share data and not worry that any one party is being fraudulent (within reason!).
What blockchain is not a perfect answer for is where a simple old fashioned database will suffice. Sometimes you don’t need the level of security that blockchain provides. A number of the example use cases we see mentioned today are cases which could be addressed with database technologies we all have, bundled in with standard backups and fail over solutions. To identify the right use cases for blockchain you need to look at where trust, security and value for money merge for blockchain to be a good idea.
So blockchain can't be hacked?
Not quite. It is worth stating that blockchain is not 100% unbreakable. Getting access to over 51% of the computers the blockchain sits on is perhaps the most famous example. Just google “how to hack blockchain” for other examples.
Blockchain is great, and is more secure than anything before it, but isn’t 100% unhackable. Nothing is. However, it is a technology which, through high security and robustness, can be applied to provide business solutions previously seen as impossible, possible. For example, building trust and smoother working throughout a supply chain. The hard part is not the technology - it's getting people to understand it, identify how it can help, and then to get the relevant different parties to agree to use it.