This process is precisely what prevents any attempt to modify previously created block. Even if some brave and persistent hacker tried and managed to change at least one letter, the block could not be transferred to the general ledger because the hash encoded in the next block would no longer match. And all the efforts of an unfortunate hacker would be in vain.
The blockchain potential is reflected in a wide range of possible applications. The new technology will redefine the way we perform transactions regardless of whether we buy, sell, fulfill obligations toward government, enter into contracts or we need to check the authenticity of something. A faster and more secure way of checking information critical to what we do is enabled by a combination of openness of the Internet and the security of cryptography.
To give you some idea how this works in practice, I would take a simple example.
Let’s say you want to buy tickets for your favorite concert but you’re not sure that you will get the valid ticket via existing online ticket selling platform. Here enters a blockchain that enables going directly to the source, bypasses agents and third parties and ensures that the ticket you bought is reliable and original.
Once the ticket is sold, the address is assigned to it, i.e. a set of data that can be publicly seen on a blockchain. While your identity as a customer cannot be seen anywhere, only you will get a private key that is the only tool to “unlock” the address and download the ticket.
This technology can also spark additional efficiency of markets and the removal of bottlenecks. For example, on financial markets, trading is done in a matter of seconds but the exchange of assets and money may take several days and involve a larger number of participants. All this can lead to errors, delays, added costs and unnecessary risks. Blockchain allows direct contact and completion of the transaction in eight to ten minutes.
Concluding smart contacts is also a novel that represents section of this revolution. The contract is now part of the computer code that describes the transaction step by step, can connect multiple blocks of information and exchange assets as needed, all in order to carry out the portion or the whole transaction.
Another important application is the storage and use of sensitive information. Personal documents are traditionally issued and controlled by state authorities. Digitally issued blockchain identification can be a safer and faster mechanism. An international and personally yours blockchain, available anywhere in the world, would allow you to prove your identity, connect with family members and receive money wherever you are without a bank account.
Where are we today?
Some companies are conducting pilot projects with blockchain technology. Early adopters are also active. The next expected steps are engagement of more cautious players, followed by everyone else.
Although the potential for use is high, the technology is still in its initial stages. Before it is widely adopted, some obstacles must be overcome.
Even the best-developed blockchain technology behind Bitcoin can handle five to eight transactions per second. This is still incomparable to transaction processors such as Visa and MasterCard, which can process 10,000 times more transactions at the same time.
The solution is not behind the corner but it’s in sight. As usual, the whole process will be greatly supported by pioneers who are willing to invest time and resources in using cryptographic mathematics and technology advancement for general acceptance of blockchain technology. One thing is certain. Its time is coming.