4 Things You Should Know About Blockchain
With the increased awareness of cryptocurrency in recent years, another term gaining traction is blockchain. Read below to unblock your chain of thought about this concept.
There are many modern technology advancements that we do not need to understand to use. One such technology is blockchain. While a detailed explanation about how the technology works will be unnecessarily technical for many people who are looking to make use of it, this article simplifies the main features you can expect. In addition to the below benefits, if you would like more information on how a business can apply blockchain in practice, click here.
One of the many facets of blockchain is as a digital ledger of transactions. Blockchain holds information on a database that is available to multiple users, giving easy and secure access. Users write new information on the ledger without the ability to modify old information. The cementing of information once written on the ledger makes this a tool that enforces accountability. There is little scope for human error and no opportunity for malicious activity. The permanency of records also ensures a trail exists in order to identify the history of blocks of information.
As with most technologies, having activities run from a central location makes the system prone to cyber attacks. This is in contrast to a distributed or decentralised system which cannot be disrupted as easily. The blockchain database exists across several locations, meaning it does not have a single point of failure as it exists across several locations. The decentralised nature of blockchain therefore contributes to the security and efficiency of this technology.
Following from the previous point, the nature of information on a blockchain means it is accessible to anyone on the internet. The records are public and it is easy to verify the information it contains. As with cryptocurrency, which sees users interacting with each other without a middle-man, blockchain also provides users the means to interact directly with each other. While handing control over to the users, the transactions are much more efficient as there is no intermediate stepping stone.
Blockchain has inherent security measures protecting transactions from malicious activity. Consensus protocols ensure there is a process of review and confirmation of information. Without going into too much detail, the review involves various devices agreeing on an answer which is put forward by a device attempting to change information. This method makes the system self-auditing, preventing a single entity from being in control.
The above factors all contribute to making blockchain a useful tool to secure your business and make operations more efficient. While the concept may seem complex, understanding these basic principles will help you make the most out of this technology. If you would like more information about blockchain, an IT Lawyer will be happy to answer any questions you may have.
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Kayal is a Legal Tech Intern at Lawpath as part of the content team. She is currently studying a Bachelor of Laws with a Bachelor of Science (major in Cyber Security) at Macquarie University.