blockchain technology

Blockchain Technology And How It Works

When it comes to blockchain, a number of people can write entries into a record of information, and a community of users can control how to record of information is revised and updated. At the same time, Wikipedia entries are not the product of a sole publisher. No one person controls the information.

Sinking to ground level, however, the differences that make blockchain technology unique become clearer. Though both run on the Internet, Wikipedia is built into the World Wide Web using a client-server network model. A user with permissions connected with its account is able to change Wikipedia entries held on a centralized server.

Whenever a user accesses the Wikipedia page, they will get the updated version of the ‘master copy’ of the Wikipedia entry. Control of the database stays with Wikipedia administrators permitting for access and permissions to be maintained by a central authority.

Wikipedia’s digital backbone is similar to the highly protected and centralized databases that governments or banks or insurance companies use today. Control of centralized databases stays with their owners, including the maintenance of updates, access and protecting against cyber-threats.

The database that’s distributed is created by blockchain technology has a fundamentally different digital backbone. This is also the most known and important feature of blockchain technology.

Wikipedia’s ‘master copy’ is edited on a server and all users see the new version. In the case of a blockchain, every node in the network is coming to the same result, each updating the record individually, with the most popular record becoming the de-facto official record in lieu of there being a master copy.

Transactions are broadcast, and every node is creating their own updated version of events.

It’s this aspect that makes blockchain technology so useful- it stands for an innovation in information registration and distribution that terminates the need for a trusted party to manage and facilitate digital relationships.

Still, blockchain technology, for all its merits, is not a new technology.
Instead, it is a mixture of proven technologies applied in a new way. It was the particular planning of three technologies (the Internet, private key cryptography and a protocol governing incentivization) that made bitcoin creator Satoshi Nakamoto’s idea so useful.

The result is a system for digital interactions that doesn’t need a trusted third party. The work of securing digital relationships is implied — supplied by the sophisticated, simple, yet strong network architecture of blockchain technology itself.

What is a digital trust?

Trust is a risk judgment between different parties, and in the digital world, figuring out trust often comes down to proving identity (authentication) and proving permissions (authorization).

In simpler terms, we want to know, ‘Are you who you say you are?’ and ‘Should you be able to do what you are trying to do?’

In regards of blockchain technology, private key cryptography provides a powerful ownership tool that fulfills authentication requirements. Possession of a private key is ownership. It also saves a person from having to share personal information than they would need to for an exchange, leaving them open to hackers and other cyber threats.

Though, authentication doesn’t suffice. Authorization – having enough capital, broadcasting the correct transaction type, etc – needs a distributed, peer-to-peer network as a starting point. A distributed network cuts the risk of centralized corruption or failure.

This distributed network must also be committed to the transaction network’s record keeping and security. Authorizing transactions is a conclusion of the whole network applying the rules upon which it was created (the blockchain’s protocol).

Authentication and authorization, crucial to digital transactions, are established as a result of the configuration of blockchain technology.


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