Instructor: Aleksi Aaltonen, Section 002

Blockchain: What is it and Why is it Important?

Blockchain has been a term that has been thrown around for a while, even though many people do not completely understand what it is. Essentially, it is a potentially revolutionary piece of technology that top companies are currently using to track shipments and store big data. Going back to the original question of what it is, blockchain is a public digital ledger. So here is how it works:

  1. One person wants to pay another person
  2. That payment is logged and entered into a “block” with other transactions
  3. The data from that “block” is sent to every entity in that network
  4. The entities in the network verify that “block”
  5. The “block” is then added to a chain, where it cannot be changed
  6. The transaction is complete

One of the major advantages of blockchain technology is the high level of security it offers. Once the “block” is added to a chain, that information cannot be changed so it is almost impossible to hack since the ledger is held by so many entities and there is a permanent public record of the ledger as well. Additionally, when the entries are being logged in, they are usually logged using pseudonyms so that provides even more security.

So why is this so important? In light of the recent breach of security with Facebook and Google, it is crucial to look for technology that provides tighter security online, especially when it comes to sensitive information such as financial transactions. In today’s age, almost every company is heavily dependent on technology when it comes to their customers’ data and it is imperative to ensure that their information is being protected. It raises a lot of concern from a consumer’s perspective when two of the biggest tech companies are unable to provide the high level of security they expect. That is why we should be exploring new technologies that have some form of a public record while being almost impossible to hack.

One Response to Blockchain: What is it and Why is it Important?

  • Blockchain is very interesting technology that will take some years to mature and really take effect (I think). However, it has also some downsides that need to be addressed, for instance, maintaining the distributed ledger system (at least for Bitcoin) takes a lot of energy (that is, electricity). Other downsides include that if transactions can be made anonymously, it can become a nice tool for criminals. Definitely worth watching what’s happening with blockchain!

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