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What is BLOCKCHAIN? The best explanation of blockchain technology

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many people think of blockchain as the

technology that powers Bitcoin while

this was its original purpose blockchain

is capable of so much more

despite the sound of the word there's

not just one blockchain blockchain is

shorthand for a whole suite of

distributed ledger technologies that can

be programmed to record and track

anything of value from financial

transactions to medical records or even

land titles you might be thinking we

already have processes in place to track

data what's so special about blockchain

let's break down the reasons why

blockchain technology stands to

revolutionize the way we interact with

each other reason number one the way it

tracks and stores data block chain

stores information in batches called

blocks that are linked together in a

chronological fashion to form a

continuous line metaphorically a chain

of blocks if you make a change to the

information recorded in a particular

block you don't rewrite it instead the

change is stored in a new block showing

that X changed to Y at a particular date

and time sound familiar

that's because blockchain is based on

the centuries-old method of the general

financial ledger

it's a non-destructive way to track data

changes over time here's one example

let's say there was a dispute between

Ann and her brother Steve over who owns

a piece of land that's been in the

family for years

because blockchain technology uses the

ledger method there is an entry in the

ledger showing that Adam first owned the

property in 1900 when Adam sold the

property to Dave in 1930 a new entry was

made in the ledger and so on every

change of ownership of this property is

represented by a new entry in the ledger

right up until Ann bought it from their

father in 2007 and is the current owner

and we can see that history in the

ledger now here's where things get

really interesting

unlike the age old ledger method

originally a book then a database files

stored on a single system blockchain was

designed to be decentralized and

distributed across a large network of

computers this decentralizing of

information reduces the ability for data

tampering and brings us to the second

factor that makes blockchain unique it

creates trust in the data before a block

can be added to the chain a few things

have to happen first a cryptographic

puzzle must be solved thus creating the

block the computer that solves the

puzzle shares the solution to all of the

other computers on the network this is

called proof of work the network will

then verify this proof of work and if

correct the block will be added to the

chain the combination of these complex

math puzzles and verification by many

computers ensures that we can trust each

and every block on the chain because the

network does the trust-building for us

we now have the opportunity to interact

directly with our data in real time and

that brings us to the third reason

blockchain technology is such a

game-changer

no more intermediaries currently when

doing business with one another we don't

show the other person our financial or

business records instead we rely on

trusted intermediaries such as a bank or

lawyer to view our records and keep that

information confidential these

intermediaries build trust between the

parties and are able to verify for

example that yes and is the rightful

owner of this land

this approach limits exposure and risk

but also adds another step to the

exchange which means more time and money

spent

if anne's land title information was

stored in a blockchain

she could cut out the middleman her

lawyer who would ordinarily confirm her

information with Steve as we now know

all blocks added to the chain have been

verified to be true and can't be

tampered with so an can simply show

Steve her land title information secured

on the blockchain

and would save considerable time and

money by cutting out the middleman

this type of trusted peer-to-peer

interaction with our data can

revolutionize the way we access verify

and transact with one another and

because blockchain is a type of

technology and not a single network it

can be implemented in many different

ways some block chains can be completely

public and open to everyone to view and

access others can be closed to a select

group of authorized users such as your

company a group of banks or government

agencies and there are hybrid public

private blockchains too in some those

with private access can see all the data

while the public can see only selections

in others everyone can see all the data

but only some people have access to add

new data a government for example could

use a hybrid system to record the

boundaries of Anne's property and the

fact that she owns it while keeping her

personal information private or it could

allow everyone to view property records

but reserved to itself the exclusive

right to update them it is the

combination of all these factors

decentralizing of the data building

trust in the data and allowing us to

interact directly with one another and

the data that gives blockchain

technology the potential to underpin

many of the ways we interact with one

another but much like the rise of the

Internet this technology will bring with

it all kinds of complex policy questions

around governance international law

security and economics here at the

Center for international governance

innovation we seek to bring trusted

research that will equip policymakers

with the information they need to

advance blockchain innovations enabling

economies to flourish in this new

digital economy learn more about our

work on blockchain technology by

visiting our website and social media

channels

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