When you vote have you ever wondered whether your ballot is actually counted? If you meet someone online how do you know they’re who they say they are? When you buy coffee that’s labeled fair trade what makes you so certain of its origin? To be sure really sure about any of those questions you need a system where records could be stored, facts can be verified by anyone, and security is guaranteed. That way no one could cheat the system by editing records because everyone using the system would be watching.
Systems like this are on the horizon and the software that powers them it’s called a blockchain. Blockchains store information across the network of personal computers, making them not just decentralized but distributed. This means no central company or person owns the system, yet everyone can use it and help run it.
This is important because it means it’s difficult for any one person to take down the network or corrupt it. The people who run the system use their computer to hold bundles of records submitted by others, known as “blocks,” in a chronological chain.
The blockchain uses a form of math called cryptography to ensure that records can’t be counterfeited or changed by anyone else. You’ve probably heard of the blockchain’s first killer app: a form of digital cash called Bitcoin that you can send to anyone, even a complete stranger. Bitcoin is different from credit cards, PayPal, or other ways to send money because there isn’t a bank or financial middlemen involved. Instead, people from all over the world help move the digital money by validating others’ Bitcoin transactions with their personal computers, earning a small fee in the process. Bitcoin uses the blockchain by tracking records of ownership over the digital cash, so only one person can be the owner at a time and the cash can’t be spent twice, like counterfeit money in the physical world can.
But bitcoin is just the beginning for blockchains.
In the future, blockchains that manage and verify online data could enable us to launch companies that are entirely run by algorithms, make self-driving cars safer, help us protect our online identities, and even track the billions of devices on the Internet of Things. These innovations will change our lives forever and it’s all just beginning. To learn more about the urgent future of the blockchain please visit www.iftf.