6 Blockchain Questions Your Boss Needs Answered Now
Blockchain has been making front page news in disruptive tech headlines, but too many business leaders are still unclear on exactly what it is, what it’s not, and how to separate blockchain hype from reality. Make sure you – and your boss – are in-the-know on blockchain:
Question 1: What is blockchain?At its core, blockchain is a public ledger technology that uses distributed consensus mechanisms and cryptography (digital signatures and cryptographic hashing) to provide an authoritative and unalterable record of secure transactions.
Question 2: Blockchain and bitcoin are the same, right?Not quite. All bitcoin is blockchain, but not all blockchain is bitcoin. Blockchain is a technology, while bitcoin is an application that uses the technology. Bitcoin is the first (and most successful) commercial implementation of blockchain technology. There are other cryptocurrencies out there (about 3000), including Ether, Litecoin, Monero, Ripple, and Dash, but bitcoin remains the most popular.
Question 3: Why all the hype about blockchain?Blockchain is paving the way for a radical transformation of established industries, The true disruption of blockchain is in the elimination of centralization through a trusted third party. This centralized architecture underlies the brunt of transactions today. Instead, blockchain leverages cryptography to enable untrusted parties to transact directly in a secure manner. Known as trustless trust, it is starting to dramatically transform established industries, like the financial services sector, as well as in emerging ones, such as the Internet of Things (IoT).
Question 4: What makes blockchain so secure?Blockchain has three primary transformative features that cement security: Immutability (the data cannot be changed after it’s been created), transparency (all participants can see what’s going on), and autonomy (self-governing). As such, no one person (a middle man) can change a record without the others knowing. The older the record, the more secure it is, solidified in the block and replicated across all the nodes in the network.
Question 5: So, does that make blockchain 100% Secure?The fact is that 100% security does not exist. Blockchains are potentially susceptible to colluding attacks that cheat the network into accepting unlawful transactions. That said, such attacks would require a large number of colluding parties, and in the case of bitcoin, this would be almost impossible to achieve. And future malicious attempts to subvert the technology may reveal currently unknown vulnerabilities.
Question 6: So, how could blockchain change the world?Blockchain technology will continue to move beyond digital payments. For example, blockchain is making possible smart contracts – residing on a blockchain and written in computer code -- that can release funds, communicate information, record and embed data, or even make purchases. All this in a pre-programmed, self-executing, and autonomous manner.
Extending blockchain to smart contracts could have a transformative effect on all manner of digital identities, voting, governance, asset tracking, engineering-related transactions, supply chain tracking, M2M transactions, supplier identity and reputation, etc. In doing so, blockchain is poised to radically transform business, legal, social, and political structures as we know them.