What is blockchain technology?

Dealbreaker’s Mike McDonald defines blockchain as “a distributed or decentralized digital network that enables the exchange of value or the ability to confidently share data—including financial assets and contracts—in a secure environment.” He writes

The core design of blockchain builds trust into every transaction and shared data source by creating a sort of open ledger that can be used to track assets. This ideally enables greater security, cost efficiency and optimized reconciliation processes.

At its core, blockchain is about going from a scenario where companies manage their own copies of a set of data to a world where all parties have access to a shared immutable set of data. Opening up data beyond a single organization requires using cryptographic techniques that use public and private “keys” to ensure confidentiality and privacy. Blockchain is simply a way to verify and order transactions in a distributed ledger which represents a record of consensus. Records in that ledger can be added but not deleted, and all transactions have an auditable trail and a traceable digital fingerprint. The data in the ledger is encrypted by individual transaction, meaning that while a hacker could break into a single transaction and alter it, hypothetically they could not change any other entries in the ledger.

For more see McDonald’s Everything You Wanted To Know About Blockchain (But Were Afraid To Ask). See also Jan Hendrik Witte’s The Blockchain: A Gentle Introduction. Both are recommended. — Joe

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