About a year ago, a number of people, truly passionate enthusiasts and straight-up frauds alike, started manically preaching the coming of the Blockchain Almighty. It will change the world forever, said the Cult of the Blockchain. The technology, they predicted, would enable ultimate transaction chain transparency thanks to the distributed ledger. Traditional payments systems would be tossed out on the garbage heap of history. Central banks would be transformed throughout the world.<\/p>\n
Forget about transactions for a second \u2014 blockchain was set to make a lot of other things obsolete. For example, the fanatics said that, thanks to blockchain, we\u2019ll no longer need to notarize documents, and GPS data could confirm deliveries, causing payments to be released automatically when an item arrives at its destination. Basically, to fix the world\u2019s imperfections, just add blockchain.<\/p>\n
Unfortunately, neither enthusiasts nor frauds managed to explain how the magic would happen. Worse still, nobody bothered to talk about blockchain\u2019s inherent drawbacks, except for the problem of its high performance demands, which make the technology nonviable for massive transactions (say, tens of thousands of transactions per second, as is common in any modern payment system).<\/p>\n
By end of 2016, the lively conversation had died away. The frauds mostly scattered, and the enthusiasts got serious. Now it\u2019s time to give this technology a sober look and figure out what blockchain is and why it could\u00a0indeed introduce some fundamental changes.<\/p>\n
Simply put, blockchain is a chain of transactions. Each block on the chain \u2014 or database \u2014 contains information about the previous block. One cannot change the information without attracting notice. Once transaction data is affirmed by miners (the controllers or keepers of the process), the block becomes ironclad. Its contents are open, but they are protected by a hash chain<\/a>. The database contains publicly available, unecrypted information about all transactions, signed by asymmetric key<\/a>.<\/p>\n I don\u2019t think it makes sense to cover the topic is deeper detail, since you can read it in a separate post<\/a>. But in essence, using blockchain we (theoretically) can obtain a reliable, initially trusted, and tamper-proof database. It\u2019s impossible to mimic a transaction by showing a faux payment confirmation. You cannot say you paid on time but the transaction took a long time to execute. They say you can negotiate even with a bank, but not with blockchain. All of your actions are carved in stone, with no government involvement needed.<\/p>\n Simplifying blockchain \u2013 https:\/\/t.co\/o6X4YhjHjh<\/a> #bitcoin<\/a> #infosec101<\/a> #banking<\/a> pic.twitter.com\/HbyUYTyt4J<\/a><\/p>\n \u2014 Kaspersky (@kaspersky) September 8, 2016<\/a><\/p><\/blockquote>\n\n