Blogchain 1.5— A Deeper Look at Blockchain Technology
Alkimi is using blockchain technology to increase the transparency and efficiency of the digital ad exchange model.
By using blockchain technology Alkimi can massively reduce the number of fees that an advertiser would usually pay.
What is the effect of this?
Advertisers reach a larger audience for less.
In blog 1.0 we did an introductory overview of blockchain for anyone to understand. We recommend that you read that first as it lays the foundations for this blog.
So, let’s dig a little deeper into the technology that we believe will permeate virtually every industry over the next 20 years. If you are concerned about us being too technical let us assure you now that we will keep it understandable and approachable every step of the way.
So, without further ado. Let’s dig a little deeper!
Expect to learn:
- How each block is linked to form a chain
- How hashes help keep blockchains secure
- What blockchain technology has solved
But first…
Let’s have a quick reminder of what a blockchain is, as it’s always good to have a refresher.
A blockchain is a distributed ledger, it’s a highly secure public database.
The information (or data) on a blockchain is verified and updated by a large number of computers at all times. Once data is included within a block on a blockchain it cannot be changed.
There is no central point of control with a blockchain, it is decentralised. The computers running a blockchain are controlled by many people all over the world.
No single person or authority can control a decentralised blockchain. No one has enough power to dictate its future or influence what data is published inside blocks.
Centralised Decentralised
In blog 1.0 we compared a blockchain to the chain of a boat, however, we did not explain how individual blocks were linked, and how it makes a blockchain super secure.
Let’s find out!
How are blocks connected to each other?
An individual block is comprised of 3 things:
- Data
- A hash
- The hash of the previous block
Data is just information compressed into a digital form. A ‘hash’ is essentially the fingerprint of a block, it is completely unique and you can identify a block by its hash easily.
Technically, a cryptographic hash is a mathematical function. Its ‘function’ is turning a list of data of any size into a standard size. As well as encrypting it in the process.
Importantly, this encryption is a one-way road, it is extremely difficult to decrypt something once it has passed through a cryptographic hash function.
You could compare it to putting milk in your tea. Easy to put in, very hard to take out.
For this reason, blocks are almost impossible to decrypt.
Are you following along?
If you look at an individual block on a blockchain you can see its own hash (fingerprint), and the hash of the previous block.
Each individual block is linked to its immediate predecessor, this trend continues all the way to the first-ever block.
Block 10 links to 9, 9 links to 8, 8 links to 7, and so on..
Blocks are linked together with hashes to form a blockchain.
The utility of hashes does not stop there, they are used in many different capacities. Hashes are also an integral part of the security of a blockchain.
How do hashes make a blockchain secure?
If you make a change to a block, it will cause its hash (fingerprint) to change. If a block’s hash changes then it is no longer the same block. A change to the hash of the block means that it no longer matches with any corresponding blocks.
If we stick with the fingerprint analogy, this would be like someone trying to get away with scanning their own fingerprint in replacement of yours.
This is a silly thing to do because each fingerprint is unique and it’s easy for a fingerprint scanner to detect whose fingerprint is who’s.
In this analogy, the fingerprint scanner is all the computers verifying the blockchain. Hashes are one of several reasons why it is so difficult to change the information on a blockchain without detection.
Hashes are very useful for detecting changes to blocks.
Now, it’s all well and good explaining how blockchain technology is secure. But why is it useful? And what has it actually solved?
This is the important bit so read carefully.
What has blockchain technology solved?
- Data tampering
A blockchain records data that is highly secure, decentralised and public. As a result of this, the data on a blockchain is virtually impossible to tamper with.
Having tamperproof data could be useful to any industry. Auditing, supply chain management and voting are great examples of when having tamperproof data would be very useful for added transparency and traceability.
Blockchain technology can be used as a tool for preventing or identifying corruption.
2. Removing the middleman
There is no middleman or trusted 3rd party involved in blockchain transactions. Blockchains have removed the need to trust someone with your data (or money) and have given you the choice to control your assets if you want to.
You have to trust that a bank will display the correct bank balance, not lose your money or go bankrupt. You don’t have to trust a blockchain, you can always verify.
A blockchain is a peer-to-peer network. There is no need to trust a middleman.
3. Censorship resistance
You cannot censor the information on a blockchain. Once included on the blockchain is it essentially impossible to reverse.
A blockchain simply records information, it is completely neutral and doesn’t distinguish. It cannot be influenced by an organisation.
Let’s wrap this up.
Blockchain technology will help industries to increase the efficiency and transparency of their operations.
Now that we understand blockchain technology, let’s discover how it will change the world. Click here for more.
Key takeaways:
- Blocks are linked together with hashes, which are like fingerprints (unique)
- Hashes are very useful for detecting changes to blocks
- Blockchain technology can help to prevent corruption
