What it is: Blockchaining technology uses encryption to create a public database.
You may have heard of bitcoin, a virtual currency that exists only on the Internet. What makes bitcoins so interesting isn’t being a new currency but how the underlying technology works to make it possible in the first place.
You can’t just create a virtual currency out of thin air because people could easily copy it. To prevent duplicate currency, bitcoin relies on a technology called block chaining. Basically block chaining makes it possible to create a public database that anyone can view but not modify. By using encryption, modifications can only be made once in such a way that others can verify its authenticity. That means instead of relying on trusted third parties such as notaries or banks, block chaining allows everyone to create publicly accessible databases that can be verified as truthful.
For bitcoin, that means the value and number of bitcoin currency in the wild can be accurately tracked so nobody can create counterfeit bitcoins. For other uses, block chaining technology takes databases out of the hands of governments and other bureaucracies and puts them in the hands of people. In many parts of the world, governments are supposed to keep track of land titles, but this ledger is often inaccurate and hard to access. By using block chaining, people could create a valid database of land titles that’s publicly accessible to anyone. This makes block chaining useful far beyond creating virtual currencies like bitcoin.
Any time you take away the middleman, you create greater efficiencies. Amazon striped away the book stores and distribution network to make book buying direct to the customer. Tesla is trying to do the same with car sales. Block chaining promises to remove the middleman from trusted authorities like governments (although most people don’t trust governments either) and allow faster access and more readily available information.
Technology rarely exists in a vacuum. Instead, technology creates new opportunities while wiping out old ways of life. Computers eliminated typewriters and typing pools while automated switching systems eliminated telephone operators. Old jobs need to be scraped away and shoved in the trash so new jobs and more efficient technologies can improve life for everyone else.
Anyone want to return to the days of typewriters to create more jobs for typists? Anyone want to abandon pocket calculators so slide ruler manufacturers can hire people and create more jobs?
So bitcoins by themselves are interesting, but block chaining, the technology behind bitcoins, is far more revolutionary. Ironically by using encryption, block chaining can make information more easily accessible to everyone.