Blockchain refers to the digital ledger for transactions involving cryptocurrency. What makes blockchain different than other databases is its decentralization – all information is accessible to anyone in the network as a shared database. Every transaction can be programmed to reconcile in regular intervals, and every computer in the network can receive an automatically downloaded copy of the blockchain. Blockchains have the potential to greatly influence the future of the payments and card industry. Learn more with the beginner’s guide to blockchain:
What sets blockchain apart from databases is the reduced vulnerability due to its decentralized electronic nature. There is no central point of access, so it cannot be hacked in the same way as standard centralized databases. Its security methods are based on encryption, in which participants have their own assigned keys as digital signatures, rather than the standard username/password access. Also, since each digital record (‘block’) is connected to the blocks preceding and following it, a block can only be altered if all the blocks connected to it are also altered – making it a great deal more effort for hackers.
Another distinguishing factor of blockchain technology is its integrity in terms of it not being able to be controlled by any one entity. Since the entire blockchain ledger is stored electronically within the network, no single person can oversee it – all users are privy to a chronological public ledger whose history cannot be altered by any one individual. This ensures a sense of accuracy that is different than centralized databases that can only be accessed by few and whose history can be changed or deleted.
The original purpose for blockchain was as a ledger to account for Bitcoin, but its applications have expanded beyond cryptocurrency. In terms of financial applications, blockchain can be used for auditing and fraud detection, payments (including peer-to-peer), transactions processing, and investing and trading. It can also be utilized for record-keeping (such as medical records), contracts, and notarizing. As adoption becomes more widespread, people are finding new and interesting ways to incorporate blockchain technology into everything from fundraising to government to augmented reality.
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