Blockchain

Blockchain (def.) is a distributed database existing on multiple computers at the same time. It is constantly growing as new sets of recordings, or 'blocks', are added to it.

At its most basic level, blockchain is literally just a chain of blocks, but not in the traditional sense of those words. When we say the words “block” and “chain” in this context, we are actually talking about digital information (the “block”) stored in a public database (the “chain”). Each block contains a timestamp and a link to the previous block, so they actually form a chain. “Blocks” on the blockchain are made up of digital pieces of information.

Specifically, they have three parts:

• Blocks store information about transactions like the date, time, and dollar amount of your most recent purchase from an online retailer, like Ebay, Amazon, Target, Walmart, etc...
• Blocks store information about who is participating in transactions.
  A block for a purchase from the online retailer would record the purchaser's name along with the online retailer's. Instead of using the buyer's actual name, the purchase is recorded without any identifying information using a unique “digital signature,” sort of like a username.
• Blocks store information that distinguishes them from other blocks.
  Much like a person's name to distinguish us from one another, each block stores a unique code called a “hash” that allows us to tell it apart from every other block.Example: buyer made a purchase on Amazon, but while it’s in transit, the buyer decide they need a second one. Even though the details of the new transaction would look nearly identical to the earlier purchase, we can still tell the blocks apart because of their unique codes.

While the block in the example above is being used to store a single purchase from Amazon, the reality is a little different. A single block on the blockchain can actually store up to 1 MB of data. Depending on the size of the transactions, that means a single block can house a few thousand transactions under one roof.

Practical Application

Blocks on the blockchain store data about monetary transactions but blockchain is actually a pretty reliable way of storing data about other types of transactions, as well. In fact, blockchain technology can be used to store data about property exchanges, stops in a supply chain, and even votes for a candidate.

Professional services network Deloitte recently surveyed 1,000 companies across seven countries about integrating blockchain into their business operations. Their survey found that 34% already had a blockchain system in production today, while another 41% expected to deploy a blockchain application within the next 12 months. In addition, nearly 40% of the surveyed companies reported they would invest $5 million or more in blockchain in the coming year. Here are some of the most popular applications of blockchain being explored today.

Bank Use

Perhaps no industry stands to benefit from integrating blockchain into its business operations more than banking. Financial institutions only operate during business hours, five days a week. That means if you try to deposit a check on Friday at 6 p.m., you likely will have to wait until Monday morning to see that money hit your account. Even if you do make your deposit during business hours, the transaction can still take 1-3 days to verify due to the sheer volume of transactions that banks need to settle. Blockchain, on the other hand, never sleeps.

Cryptocurrency

Blockchain forms the bedrock for cryptocurrencies like Bitcoin. As we explored earlier, currencies like the U.S. dollar are regulated and verified by a central authority, usually a bank or government. Under the central authority system, a user’s data and currency are technically at the whim of their bank or government. If a user’s bank collapses or they live in a country with an unstable government, the value of their currency may be at risk. These are the worries out of which Bitcoin was born.

Healthcare

Health care providers can leverage blockchain to securely store their patients’ medical records. When a medical record is generated and signed, it can be written into the blockchain, which provides patients with the proof and confidence that the record cannot be changed. These personal health records could be encoded and stored on the blockchain with a private key, so that they are only accessible by certain individuals, thereby ensuring privacy.

Property Records

If you have ever spent time in your local Recorder’s Office, you will know that the process of recording property rights is both burdensome and inefficient. Today, a physical deed must be delivered to a government employee at the local recording office, where is it manually entered into the county’s central database and public index. In the case of a property dispute, claims to the property must be reconciled with the public index.

Smart Contracts

A smart contract is a computer code that can be built into the blockchain to facilitate, verify, or negotiate a contract agreement. Smart contracts operate under a set of conditions that users agree to. When those conditions are met, the terms of the agreement are automatically carried out similar to Escrow account.

Supply Chain

Suppliers can use blockchain to record the origins of materials that they have purchased. This would allow companies to verify the authenticity of their products, along with health and ethics labels like “Organic,” “Local,” and “Fair Trade.”

Voting

Voting with blockchain carries the potential to eliminate election fraud and boost voter turnout, as was tested in the November 2018 midterm elections in West Virginia. Each vote would be stored as a block on the blockchain, making them nearly impossible to tamper with. The blockchain protocol would also maintain transparency in the electoral process, reducing the personnel needed to conduct an election and provide officials with instant results.