The blockchain originally is the technology behind the bitcoin. It is essentially a ledger. Ledgers are the basis of much of the information technology that we rely daily on and are essentially nothing more than lists in which all data and its changes are recorded.
Other registers operate in a similar manner. Identity information example, are carefully kept in identity repositories. Other examples of data held in databases are the register for Dutch domain names (SIDN), electronic patients file (EPD) or for patents (RVO). These central databases have a large role in our society. The security of these systems is crucial. As I said in a previous post (Blockchain could solve Data Integrity problems) data is vulnerable. It is not desirable that information in these systems are manipulated in any way.
These central databases and ledgers require a certain sense of trust and confidence that the data is properly maintained and accessible to the right stakeholders. This trust is not just based on the access, or refusal of, but also that the information will be there the next day. This requires a full set of management and reporting around the operations surrounding such a database.
The blockchain is based upon a different paradigm. Simply put, the blockchain is a distributed database, where every unit of transaction contains its own transaction history. It consists of blocks of timestamped transactions where each block contains the hash function – basically, a key – of the next block in the chain. Thus the name blockchain. For a great 2-minute introduction, take a look at this video on the blockchain from the World Economic Forum.
Next wave
There are now countless organisations running applications on blockchain technology, from banking to transportation to employment. The next wave where blockchain technology can also be transformative: social organization and the smarter use of resources.
A lot of people are being quite optimistic about the social potential of blockchain applications, and saw blockchain technology as a way to decentralize and formalize trust – yielding great potential for new and larger forms of social organization. Because it allows for transactions to be made reliably, but without third parties – which is also why it could transform not just money, but other forms of social organization, such as voting, property, or work.
Blockchain cloud be more like a society-shifting technology than just an application of technology. The blockchain could be seen as a general purpose technology, one that might fundamentally alter society, economy and culture – like the steam engine, electricity and the internet have done before.
My point here is not necessarily that that the blockchain will become the new internet or the steam engine – it is simply too early to tell. What is certain, though, is that safe and viable applications of blockchain technology will only come about through repeated iteration after iteration. The emergence of technology takes time.