Understanding “blockchain” technology is simple …
Like most technological subjects, the concept is simple to understand, but the underlying technical implementation is difficult and tedious to understand at a technical level. Therefore, we will deal with the concept and potential uses and leave the implementation to the well-paid geeks and wizards who revel in such detail. One can describe a watch without telling you how to build one.
What is a blockchain?
The easiest way to think about blockchain is a distributed or decentralized ledger of transactions that is shared among users without the need for a central platform, service, or host.
A blockchain is simply a continuously growing list of transactions called blocks, which are linked and secured using cryptographic means. Each block typically contains a pointer as a link to a previous block, hence the term chain. In effect, it is an openly available distributed ledger of transactions, all appropriately authenticated and time-stamped that can be used to record transactions between multiple parties without the need for any central authority or gatekeeper to maintain the records on their server.
In the case of financial instruments, in essence, it is a decentralized historical record of changes in the ownership of the underlying asset. In the case of important documents, it is simply a list of authentication keys which can be used to verify identities and documents without requiring access to the originating server.
What makes blockchain useful is what makes it so dangerous to existing companies and the government …
It is a blessing and a curse that no central authority is required to use blockchain technology. Blockchain technology has the potential to disrupt and disintermediate long-established institutions who typically act as intermediary gatekeepers for transactions and profit by charging a fee for their service.
The most obvious targets of disintermediation are the financial institutions which will no longer be required in order to arrange monetary transfers between counter-parties. One major benefit to the user is that a financial institution can no longer unilaterally access your account and change or freeze any financial data.
Not only is blockchain's ability to disrupt business models and institutions, but it is also a clear and present danger to governments as transactions, be they from legitimate businessmen, casual users, or terrorists, cannot be tracked or taxed.
Trouble for blockchain technology …
Just because blockchain provides free and cryptographically secure open access to authentication and tracking credentials, does not mean that a community or an institution cannot "brand" their version of blockchain and attach additional usage requirements and restrictions for access. Or that proprietary tweaks to the underlying technology will not ensure that one branded blockchain-based system will be compatible or can be accessed by another branded blockchain-based system.
Also, blockchain may not be as anonymous as you may think. It is pseudonymous, which means that if anyone knows your specific blockchain id used on your computer, they have free access to read and trace all of your records; and without any search warrant.
Backup is critical ...
And since blockchain technology demands each user keep track of their own transactions, computer system storage and backup become an even more critical issue for those performing a multiplicity of transactions between backup periods. While the probability of cryptographic compromise is almost non-existent with today's level of technology, that is not to say an evildoer could not encrypt your blockchain store (or "wallet") and hold it for ransom until you pay for the "unlock" key.
The use of blockchain is limited only by your imagination ...
One can easily imagine documents, like school transcripts, library loans of e-books, and mortgages being created and a blockchain ledger published. Even if a school should burn to the ground or go out of business, the data would still be secure and able to be authenticated without access to the originating system.
One could easily imagine the use of blockchains to provide "self-sovereignty" over your medical records by allowing users to designate who can access and use their medical records or even ongoing health monitoring devices. No more begging the records people for a copy of your digital data. No more dependence on their portals or their ability to transfer records to other systems.
Almost anything that can be digitized, stored, and shared can benefit from blockchain technology. If not today, perhaps tomorrow or in the near future. Is your company or job subject to disintermediation with blockchain technology? If it is, you might want to consider the alternatives.