At a glance
A blockchain is a kind of decentralized database that uses Distributed Ledger Technology. The block chain is made up of individual blocks, which in turn contain transactions. Each participant in a network can attach, verify and view blocks. The block chain continues to grow - just like a chain to which new blocks are added.
The technology offers a number of advantages that make it attractive for a wide variety of scenarios.
All changes are always immediately distributed to the entire network. This means that each participant always has an up-to-date status. A fast exchange of information is possible.
All data stored in the block chain is encrypted and passed on to the network.
All transactions in a network are stored visibly and traceably in the block chain. This allows the transactions to be reconstructed retrospectively - in other words, every participant has the chance to check at any time whether a transaction has been completed correctly. The result is a system that is based on mutual control and is therefore highly trustworthy.
Block chains are extremely difficult to manipulate because all attached data must pass a network check before being verified. This consensus effectively prevents a block chain from being manipulated with fake transactions.
The block chain is stored decentrally: Instead of storing the data on a central server, each participant has its own, fully-fledged copy. Thus it is practically impossible that the database is not accessible once. In addition, it is very unlikely that data will be lost, since the most current status can usually be reliably reconstructed from the existing copies.
Private and public blockchains
Blockchains can be roughly divided into two categories: Permissioned Blockchains and Public Blockchains.
This type is only available to participants who have access authorization. Permissioned or private blockchains are therefore strongly regulated and are used accordingly in scenarios with increased security requirements, e.g. for internal company data.
This type is only available to participants who have access authorization. This means that, in principle, anyone who wants to can participate. Public blockchains, for example, are behind most crypto currencies.
The probably best known use case for block chains is in connection with crypto currencies: A crypto currency such as Bitcoin stores each digital transaction in a continuous database that can be viewed by all participants. The technology can also be used for many other scenarios, such as
- Smart Contracts
- Identity management
- Elections and Votes
- Distribute and manage certificates
- Transparency on the energy market
- Prevention of money laundering
Blockchains are considered safe, performant, difficult to manipulate and can be used in many ways. It would therefore be conceivable, for example, that in future even political elections or proof of educational and professional qualifications could take place online with the help of technology. Blockchain offers a lot of potential to make everyday applications safely and reliably available online and can enrich any industry.