What is blockchain? | Inside Energy

Millions of transactions happen around the world every single minute. We transfer money, Sign contracts, Sell houses and cars. But how can we trust that a transaction has taken place? To guarantee that these transactions have actually happened we use a middleman. A bank guarantees you sent the money. A lawyer verifies a contract. A land registry confirms you bought the house. Middlemen keep a record of these transactions and allow us to trust the person on the other side. But middlemen are costly, can make mistakes, and are not always competent or trustworthy… …and the ledgers that are used to track transactions can be tampered with. So what if we get rid of the middlemen and automate the transactions instead? Enter blockchain. Blockchain is a huge ledger of transactions made out of computer code that’s stored online. Just like those held by middlemen, the blockchain ledger can hold a record of different transactions as well. On a blockchain, transactions are stored in batches called ‘blocks’ that are linked together in chronological order. The information in each block is encrypted, timestamped and given a unique identifier that’s known as a hash. Because the hash of one block is determined by the hash of the previous block, the blocks are linked together in a chain forever. In principle, they cannot be changed, edited or deleted. If you need to make a change you have to add another transaction block onto the chain. Leaving behind an uneditable record of all past transactions. But how can you guarantee that the person managing the blockchain doesn’t manipulate the data? Well, while a middleman has full control over the ledger they manage, blockchain ledgers are not under the control of any one individual or institution. They are a distributed ledger, which means they are held across a whole network of computers. No one person can add to the chain without the approval of every other blockchain host. When a new record is added, every participant must verify the input before it is accepted. This is known as the consensus protocol. Once the record has been added to the blockchain, every participant gets a full copy. This has a key benefit. If data is stored across hundreds of locations then there isn’t a centralised ledger that a hacker can corrupt or change. A corrupt middleman might edit a record, but any record entered onto a blockchain is verified by all participants, hosted in many locations, encrypted and linked chronologically to all other existing records. This makes it very difficult to forge records. Middlemen allow us to trust the transactions that we are conducting. But their records can be vulnerable and potentially tampered with. Blockchain is less vulnerable. It is a decentralised, secure and distributed way to store data and supporters claim that it is more reliable than our current middlemen. And it is a technology that can be used to automate a whole range of transactions from signing contracts… to tracking products… to buying energy.

3 thoughts on “What is blockchain? | Inside Energy”

  1. Association of Chartered Certified Accountants (ACCA) have IFRS, Big Data Analytics, Block chain, Ai in Finance Management globally.

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