If a stranger tells you something happened then you have no frame of reference to determine whether they’re telling the truth or not. If a group of people tell the same story, independently of each other, then you’re in a much better position to separate fact from fiction. This is the same logic that governs ‘Blockchain’, the system underpinning the controversial Bitcoin currency, guaranteeing its security and total use anonymity.
In essence Blockchain is a ledger of digital events that’s shared amongst computationally isolated systems. To ensure veracity each system produces its results, and crucially its workings, to prove that it reached the same conclusion as the other systems. Once the network as a whole has agreed on the same outcome then it is indelibly entered into the ledger and it cannot be removed. There is a record of every single bitcoin transaction ever.
Blockchain operates with a series of ‘node’ machines located around the world that monitor and record financial events and transactions. These machines then collate the reports and compare the findings creating a true picture of global events through a committee agreement rather than relying on a single source. In financial terms this creates a vastly more secure audit trail than a single system reporting. For example hacking a single machine to report a company as being richer than it is creates ripples for every machine that relies on that one system for that information. If the one machines reports false information to a Blockchain then the other systems will verify that information against their own and ignore the data that doesn’t tally.
The controversy around Bitcoin stems from the power of Blockchain but like most innovation there are uses for good and for evil. One of the biggest strengths for Blockchain is the lack of private information needed. Unlike a bank the Blockchain doesn’t need to verify who you are to be able to record that a transaction occurred between you and another party. That information can be anonymised because it is verified by the committee rather than the individual. Trust is removed from the equation when it is authenticated by a group of individuals acting alone and checking each other’s results.
The more thought that’s put into Blockchain the greater its power becomes. Everything from legal matters to voting could be operated through the confidential and practically unbreakable system. Breaking out from behind the shadow of Bitcoin could mean Blockchain becomes the network that helps govern our daily lives.