What is Blockchain?

10/11/2022

You’ve probably heard of blockchain before, especially with the growing craze of Bitcoin and cryptocurrency. But blockchain isn’t just for finances, it’s just where it’s gained the most buzz in the last couple of years. Blockchain, simply put, is a database made up of a transparent network where users can trade with one another without the need for an intermediary.

Blockchain works differently from a typical database, as it structures data into blocks (hence the name). When entering new data, it comes in as a new block. Users are also unable to go back to modify already entered data. But as it updates itself, the new data is later chained onto the previous block, ordering them in chronological order. Users in a blockchain network can see everything that happens within that network. To ensure transactions are secure, blockchain uses cryptography to encode them.

Blockchain Use Cases

An obvious example of blockchain is Bitcoin. The easiest way to think of Bitcoin is thinking about how you obtain goods and services. Generally, you pay with traditional currency and the merchant gives you the product in return. Then, money’s put in a bank where it’s managed by other people. Blockchain allows users to manage the transaction on their own in a way that’s transparent and immutable. And that is essentially what Bitcoin is.

Another example is how Walmart and IBM worked together to bring about transparency to the food supply chain. In 2018, Walmart did two test runs using Hyperledger Fabric, a blockchain created by IBM. One with pork, and one with mangoes. Today, Walmart can trace over 25 products from 5 different suppliers to their origin because of this partnership. As a result, Walmart’s food supply chain is much more transparent and easier to track. And this wouldn’t have been possible without blockchain.

The Benefits of Blockchain

Blockchain embraces the idea of transparency and encourages trust. Users can see every step of transactions in its entirety. For security reasons, they can’t see every little detail as cryptography encodes those details. But they can at least see enough of the details to know it occurred. Because users can’t alter past data, it results in timely, accurate, and secure data.

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