Want to know what a Blockchain is? Read our 101 guide.

If you have even just dipped into the news over the past several months, or perhaps just have an interest in emerging technologies, you will have without a doubt heard the term ‘Blockchain’. Everyone seems to have fallen in love with the use of the word, however, despite its frequent use in everyday news and technological buzzword, many people do not fully understand what Blockchain technology is, its significance for everyday consumers or large institutions and what specific problems it is solving, which is why we at Zeux thought we would take the time to succinctly explain it to you.

So what exactly is Blockchain? Blockchain is, put rather crudely, a chain of blocks containing information. Despite the fact that the technique was originally described in 1991 by a group of researchers, who originally intended the technology to be used in order to timestamp original documents, so that it is not possible to back date or tamper with them, it did not emerge as a particularly popular technology until adopted in 2009 by Satoshi Nakamoto to create the digital cryptocurrency, Bitcoin. In fact, Blockchain is the technology that underpins several such cryptocurrencies, amongst them Bitcoin, Ethereum, Litecoin and so forth.

The real selling point of Blockchain technology is that it is a public database that is decentralised, more specifically a distributed ledger completely open to anyone, meaning that once any data has been recorded in the blockchain, it becomes extremely difficult to be able to change it. The fact that it is decentralised means there is no ‘headquarters’ for blockchain technology so soon to be gone are the days of banks being able to charge us ridiculously high fees for accessing our information and simple financial services.

Each block contains some data, as does the hash of the block and the hash of the previous block before that. The data that is stored inside the block depends on the type of blockchain, for example, Blockchain stores the details of a transaction such as the sender, receiver and amount of coins. You can largely compare a hash to a fingerprint: it identifies a block and all of its contents and is always unique, similar to a fingerprint. If you want to be able to change some of the data stored inside a block, this will cause the hash to change i.e. hash’s are very useful when you want to detect any changes to information (the blocks). If the fingerprint does change, it is no longer the same block.

Blockchain is changing the strictly regulated financial landscape, particularly the banking industry, enabling many middle men or mediators to be removed. Importantly, the technology allows for high levels of security in storing and the transmitting of data, which is particularly important at a time of increasing regulation in this area, such as tightened GDPR rules. Additionally, the open and transparent network infrastructure, decentralised nature of blockchain and the relatively low cost of operations is attractive to institutions looking to cut back on costs.

For the legal industry, blockchain underpins smart contracts, contracts which are legally binding programmed digital contracts, which are relatively quick to create, saving time, money and on top of it, added security. This is because when A and B enter into a contract, all of the information will be stored on the blockchain, allowing the whole process to be automated and making the entire transaction process much smoother, safe and importantly, transparent. Any contract disputes about what was originally written or misplacing the original document will now be a thing of the past.

What about the everyday consumer, does it have any relevance for them? Yes, without a doubt. Blockchain technology can help to combat fraud, increase the speed of peer to peer transfers or securely store and transmit your personal data such as passport, birth certificates or other personal information, in a highly secure environment, keeping your details safe, as it should be.

So the next time you hear the word blockchain, you’ll no longer need to pretend and perhaps, share your knowledge.

Want to read more of our 101 guides? Check them out here.