Most are familiar with Bitcoin and have heard that it is an unstable sort of cyber currency. Bitcoin’s extraordinary popularity in Korea has made famous almost anything that is remotely related to it—now, the public’s attention has turned to the technology that underlies Bitcoin: blockchain. The masses’ unawareness of the technology behind the intangible money is starting to change; blockchain is the new buzzword. What is it and why is it such a hot new trend?
▲ Potential uses of Blockchain Technology. Provided by Shutterstock
The core technology—blockchain— surfaced when blockchain’s first killer application, Bitcoin, a form of digital cash, was created. Even though most people are familiar with Bitcoin, with some having already used it to make transactions, very few are aware of how it works. A software called blockchain is a database that is responsible for operating Bitcoin and it is a promising technology that is hailed by many technicians as the next great innovation. Blockchain sounds like a very complex method and it is.
Identifying Its Identity
Blockchain, as its name suggests, is essentially chains of blocks that store information across a network of computers. This makes it decentralized and distributed, which means that no one person or company owns the system and everyone can access it. Blockchain includes three distinctive elements: data, the hash of the block and the hash of the previous block. The type of data stored in the block depends on the type of blockchain. For example, the data for the Bitcoin blockchain includes information about the transactions, such as the amount of coins, and details about the sender and receiver.
A hash can be thought of as a fingerprint—there is no block with the same hash and each block’s contents can be identified using this unique fingerprint. Creating a block creates its own hash and altering the information contained in the block causes the hash to change. Hence, when the hash changes, it is no longer the same block. The last feature that each block contains is the hash of the previous block, effectively creating a series of blocks like a chain. Since each block stores the information of the previous block, a single glitch in one individual block will make all the other blocks invalid.
However, thanks to their remarkable processing power, computers can decode thousands of hashes per second, quickly making the invalid blocks valid again and successfully making the program function properly. As such, storing the hashes of the previous blocks can make it too simple to hack the system. To compensate for this loophole, blockchain has something called a proof-of-work. It is a mechanism that slows down the creation of new blocks. Blockchain handles mountains of information on the database, which means that recalculating the hashes and creating valid blocks can take up to years. Again, to tamper with one block, not only will the hashes have to be computed again, but the proof-ofwork for every single block will also have to be broken down.
The manner in which blockchain is distributed—a central feature of blockchain itself—is blockchain’s final security safeguard. Unlike most websites, blockchain uses a peer-topeer (P2P) platform that allows anyone to join. This core feature allows every single member who accesses this network to receive the exact same copy of the chains of blocks, which are called the blockchain in their entirety. Once a new block is created, that block is then sent to everyone on the platform and the block is verified by everyone to see if it has been tampered with. If it is a clean block, then the block can be added to the blockchain. The above features combined together make the blocks difficult to alter, hence reducing the possibility of the program being hacked.
Blockchain as a Fishnet
The huge boom in Bitcoin decisively boosted the popularity of blockchain. Many experts including the Chief Executive Officer (CEO) of McKinsey & Company, the worldwide management consulting firm and John McAfee, famed for his role in creating the world’s first commercial antivirus software, have publicly noted that while Bitcoin is not trustworthy, blockchain is a legitimate software method. It leaves the public wondering, where else can this revolutionary technology be used?
This nascent program has a wide range of applications: education, governance, business and many more. Due to the nature of the program, it has gained prominence in areas where transparency is the key. Ourmala, a small charity group that provides yoga sessions for refugees has employed blockchain to allow donors to track their donations. Emily Brett, the founder of this generous program, sees this as a great way to initiate positive social change. In an interview with the Guardian, Brett said that by using a blockchain-based platform, “increasing public trust in charities should increase engagement and donations.”
▲ Professor Baik Doo-kwon. Photographed by Cho Eun Byul
Furthermore, Professor Baik Dookwon (School of Informatics) states that blockchain is a reliable technolog y that , when used strategically, can change the future forever. The distributed ledger allows the transfer of money, shares, property, and anything tangible to be carried out without a third party. Let real estate be taken as an example. Currently, without the use of a smart contract, a property manager must be involved. “With the employment of blockchain, the rent can be directly sent to the owner, where both of them can view the contract and payment, leaving no room for fraud,” explained the professor.
In addition, blockchain can also be a key program in the education sector. When verification of educational qualification is linked with blockchain, the bureaucratic process will become simpler and quicker. Dr. David Galindo, a senior lecturer at the University of Birmingham predicted to the Guardian that curriculum vitae (CV) fraud, which invovles deliberately giving false information on a job application, can be detected from the “beginning of the candidate’s screening phase.”
Although many have censured Bitcoin as an unidentifiable and subsequently unreliable digital currency, the software used to program it is gaining traction. The JPMorgan Chase (JPM) CEO told Fox Business reporters that “blockchain—the technology that underpins bitcoin—is real.” Likewise, Professor Baik emphasized the exact same point: “Misapplication of services utilizing blockchain is what causes mishap.” Blockchain is a technology that is constantly evolving. Its key features of distribution, decentralization and secureness are what will make it such a versatile technique in the unknown future.