Blockchain: The New Technological Revolution that Derives Its Power from the Communities

As good human beings, we all use licenced versions of our computer softwares (right?), but some bad guys could have downloaded these files from Torrent. How does this Torrent work? In Torrent world, there is not a single center where files are stored, and the file pieces are kept on different computers in the network. In other words; while you downloading a file through this system, you also serve to other “downloaders”. This is called “peer-to-peer communication”.

Blockchain also works with a similar logic. Because Blockchain is a common registry with the simplest expression. Let me explain Blockchain’s concept with an example. Let’s assume that John, Mike and Marry have a credit-to-pay situation. John gives 50 USD to Mike and Mike also gives 30 USD to Marry. All these transactions are written in a common accounting book which they all can access to. Also, all transactions happen after approval of all these users. They call it “distributed ledger”.

So why blockchain? Nowadays, users do not have any control over the system and have to rely on the person/organization in all transactions that require mediation. However, blockchain technology incorporates many innovations, as this process is transparent and focused on trusting the community instead of individual or a single corporation.

How did we get to this stage? According to Moore Theory (Moore is one of the founders of Intel), due to the fact that our technological speed is so high; while costs are halved every 18 months, new developments are doubled. You probably remember some transitions such as from 1.44 MB floppy disks to 128-GB USB memory; from 56K modem connection to the fiber internet.  These scale-up changes made possible the realization of distributed systems like Blockchain. Before that, big data could not be copied on all devices in the network or it would take years.

Well, how is this relationship established? As the name implies, Blockchain keeps transactions as block chains and sends the records to endpoints. Connects the blocks to each other and writes a summary of the previous block to the next block. Let’s say, we have a shipping business. We write on ship number 2 “There’s a 200 tonne load at number 1” and “There’s a 120 tonne load at number 2” on ship number 3. Thus, each block verifies the previous block. If an amount cannot be verified by 51% of community, the defective block is removed from the system.

So how is this validation done? This process is called reconciliation or verification. The cryptocurrencies (like Bitcoin, Etherum etc.) -which are implemented using Blockchain technology- call this process as “mining”. The machine that works to verify transactions (via solving crypto) is rewarded depending on its performance.

In summary, without further details; Blockchain is currently in its infancy but be ready to see Blockchain based technologies in some processes that require intermediation such as copyrights and patent procedures, notary operations, cargo transportation, ID/passport controls in near future.

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