You know the old saying, “I heard it on the internet, so it must be true!” Indeed, the internet is a great resource for expanding education and remaining up-to-date on current events. The trouble is, well, it’s the internet, and it’s really easy for otherwise smart people to be duped. Whether it’s a news article, a quote, or an expertly crafted phishing email, the internet has been instrumental in raising a generation of hardened skeptics.
This is what makes blockchains so attractive to entrepreneurs. Why? Because they are nearly impossible to fake.
So, back up. What is a blockchain? Blockchain is the technology that made it possible for Bitcoins to become a thing. And the way it works is kind of genius. Blockchains combines both established cryptology and years of computer science to do something remarkable—get people on the internet to agree on something. The something, in this case, is an accounting ledger. And they agree upon the accuracy of a ledger because the ledger itself is available on a public network, and previous blocks of the chain are not editable. The information also can’t be copied—only distributed—making it ridiculously difficult to forge.
It’s true, the initial use of blockchain was digital currency like Bitcoin, but the tech community is not known for finding just one use something. Indeed, blockchain could well be the bones of a new kind of internet. The same technology that made Bitcoin a trending news item is easily applicable to business.
Think about the documents that are on your shared server. Say Bob in accounting needs to make a change to last month’s P&L report for his supervisor. We’ll call her Sally. So Sally opens up the P&L report and gets the following message: “Locked for Editing”. This is how document sharing is conducted across the board right now.
Now apply the blockchain method. There’s that P&L report, and like your existing server, this document is available on any computer that shares the same network. The applied blockchain technology would remove the “Locked for Editing”, because with a blockchain, there is no master document. Since the data is shared, every piece distributed across that network has the same value, and anyone can watch in real-time as updates are made.
Though this might not sound secure, the fact that at any given time, anyone can be looking at a blockchain makes them virtually impossible to hack. A blockchain has no central owner—everyone who is a part of the network has an equal share of ownership. It also doesn’t use the username/password system that has proven to be so easily exploitable by internet hackers. Rather, it uses encryption technology to remain secure, the foundation of which are “keys”. A public key is your address on the blockchain; it is a randomly generated string of numbers. When people make Bitcoin exchanges, the coins are recorded as belonging to the address holder of the public key. A private key functions as a password, which allows the owner to view their digital assets.
The possibilities with blockchain technology are limitless. We are still in the beginning phases of seeing how this tech can be implemented across industries. So don’t be surprised if you hear the word “blockchain” with increasing frequency. And if you have any questions about how they work, well, we’ve just hit the tip of the iceberg. Feel free to contact us and we’ll be happy to discuss blockchains and how they might be useful in your business.