Now you have a better understanding of what a blockchain is, it’s time to take a look at why its use is being so widely coveted and why the general consensus is that the technology could revolutionise the way we do business in the future.
There are some clear benefits to a decentralised system when compared to a centralised system:
A Distributed Peer to Peer Network
A distributed peer to peer network means that the database of transactions can be shared and updated in real-time throughout the world with each computer verifying and updating the latest transaction. The ledger is always complete and almost entirely resistant to hacks due to the fact that the hacker would have to change all the ledgers in the circuit to achieve their goal.
Systems today are either centralized or decentralized. Both types of networks currently exist, and you’ve more than likely interacted with or heard of at least one of each.
Popular Centralised Platforms: Facebook & Google
Popular Decentralised Platforms: LimeWire & BitTorrent
Centralized platforms require all data to pass through a singular point. That is to say, you physically can’t send or receive any information without it going through that single point, which is often a server or hub.
Unlike centralised platforms, decentralized platforms do not require information to pass through a single point. Instead, many points connect, known as a peer-to-peer (P2P) network.
You probably already interact with a decentralised network
When you download a torrent file, you are interacting with a decentralized network. Torrenting is essentially the sharing of a particular file across a large network. Let’s say you want to download a copy of your favorite movie, from a popular website such as Pirate Bay. When choosing the best file to download, you’ll notice two numbers dubbed “seeders” and “leechers.
”Seeders refer to the number of people currently uploading the file, while leechers refer to the number of people downloading the file.
A high number of seeders to leechers is ideal, in order to speed up the download process. Even if you do not download anything (don’t worry, many of us don’t!), torrents are a phenomenal way to see a P2P (decentralized) network in action!
A decentralized network relies on a host of computers. As a result, blockchain technology resides on a P2P network. It physically cannot work with a single computer or point-of-connection. Instead, it requires a slew of other computers to join in, in order to complete a specific task on the network.
What is a blockchain, though? It’s a constantly growing chain of ordered information (i.e. blocks). These blocks have a timestamp, and a link to the previous block. The great thing about these blocks is that they’re built in such a way they cannot be modified once they have been recorded. What that means is that once information is placed there it cannot be changed or manipulated post creation.
In this way, blockchains are secure by design. This is because the information is not only timestamped, it’s also stored in such a way that you’d have to get into every single computer at the same time, to hack into the network.
Because centralized networks have a single point of data collection, they’re extremely susceptible to hacking. Blockchain technology, and in turn decentralization, is an effective way to work around this weakness. So, storing information on a peer-to-peer network is best in terms of security.
So what does all this mean?
Both centralised and decentralised networks currently exist in popular platforms. Centralized platforms certainly have their time and place, especially for watching all the activity on a network. Blockchain, and decentralized (peer-to-peer) networks are poised to become the biggest thing since in the tech space. In addition to affecting large companies, it’s a great tool for the individual. Blockchain is for everybody!