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.

https://www.cnn.com/2018/10/03/tech/blockchain-explainer/index.html

4 Responses 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!

  • I agree with Professor that there are some kinks to work out, however, huge potential is in store for blockchain technology. Obviously the biggest hurdles are the centralized banking system and government which serve as rather sturdy and almost impenetrable barriers to entry, yet this begs the question, “Can our current system be improved upon?” In light of our current course work with information systems, I think it is safe to say blockchain provides a plethora of improvements to a rather archaic and, at times, corrupt system where banks rely on governments and vice versa. Still in the early days of blockchain, there lies much room for illicit activities, but upon the correction of such activities a vast platform to build on is laid. I truly hope those who created the technology preserve the grounds on which it was based upon–anonymity, security, but at the same time providing transparency. What are some of the industries that you think would benefit from blockchain tech?

    • Banks are looking into blockchain but the industry will change slowly for a number of reasons. I am not a big fan of banking industry or my own big name bank, but one has to accept that some of the reasons (not all) why banking is so archaic are good. Protecting against all kinds of fraud and things that can go wrong with money is just incredible burden on banks.

      I think any industry that makes tons of small transactions/contracts might benefit from blockchain. However, I don’t thinka fully decentralized systems is viable or will be the most popular, it is likely that most blockchain implementations will get some sort centralized functions as the hybrid approach will provide the best of both worlds (security, efficiency, transparency, trust).

  • This is a very interesting topic to talk about. Blockchain technologies also offer improvements in the food industry. Most recent researches have shown that grocers and event restaurants, use blockchain technologies to find ways to improvements in quality and food safety. Let’s take Walmart as an example. The company takes advantage of blockchain track-and-trace solution to improve food tracking abilities in China. Restaurants could also find this solutions effective as it helps them to track affected items to their origins, locate issues faster so that it is easier for them to remove contaminated products from shelves, supply chains, and therefore menus.

    As a consumer, I like to have visibility into what is inside the products I put into my body. Blockchain does not only help consumers like me, but it also builds trust in the B2C relationship already established.

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