The hype surrounding blockchain has reached a fever pitch and shows no signs of slowing down. The primary reason is that blockchain has the ability to reduce a lot of efficiencies in how information is created, shared, accessed, and secured. Given its massive potential, it is often compared to the Internet Revolution that started in the late 1990s. However, it is important to state upfront that all that glitters is not gold. Similar to the early days of the Internet Revolution, blockchain also has many “me too” players who perceive the technology to be a one-size-fits-all solution when it is clearly not.
Blockchain is often explained with extensive jargon and buzzwords. In reality, for the most part, the concept is quite straightforward. It only gets tricky when the technology is implemented, and new use cases are built around it.
So let’s get straight to it—what is blockchain, and why does it matter?
- Blockchain is basically a database.
- Blockchain is a distributed database.
- Blockchain is (arguably) a crowd-managed distributed database.
- Blockchain is a crowd-managed distributed secure database.
As you may be aware, a database is essentially a collection of information stored in systems and servers for easy accessibility. Some databases that we come across in our daily lives are centralised in nature, i.e., they are stored and managed from the same location. For example, a library’s database for books and customers is only located on its server. On the other hand, Blockchain is a distributed database which means that the information is kept on multiple servers (called nodes) across different locations. Each node will have an identical copy of the blockchain, and any updates will be reflected on all of them. Therefore, even if one node malfunctions, others can continue working normally.
The term crowd-managed stems from the database being distributed between regular people like you and me working on our personal computers. It is often referred to as a peer-to-peer (P2P) network. Fundamentally, no authority or group is in control, although the reality may differ at times. The security and superiority of the blockchain will become apparent after understanding how it works.