Blockchain refers to a type of data structure that enables identifying and tracking transactions digitally and sharing this information across a distributed network of computers, creating in a sense a distributed trust network. The distributed ledger technology offered by blockchain provides a transparent and secure means for tracking the ownership and transfer of assets.
Blockchain Technology in Bitcoin and at the Enterprise Level
Initially used as the transactional technology behind the cryptocurrency (or digital currency) Bitcoin, blockchain technology has started to gain traction in the enterprise as well. As is the case with Bitcoin, blockchain enables enterprises to make and verify transactions over a network without the need for a central authority.
In addition to tracking assets and the transfer of assets throughout supply chains, enterprises are also looking to use blockchain to electronically proffer and enforce contracts.
Blockchain has gained considerable traction in recent years as Bitcoin’s use has increased and the technology has become more mainstream with companies. In fact, according to a study released in May 2016 by Pegasystems, Cognizant and Marketforce, many global financial services retailers see blockchain as having the potential to be the most significant technological innovation since the Internet.
How Blockchain Works
Blockchain uses cryptography to create a distributed trust network wherein each participant on the network is able to manipulate the digital ledger of transactions securely and without requiring a central authority.
In a sense, a blockchain serves as a global spreadsheet or ledger that anyone on the network can view at any time. All the transactions are verified, cleared and recorded in a block that is encrypted and saved periodically and is linked to the preceding block, creating a chain.
The blockchain process of securely and permanently time-stamping and recording all transactions makes it extremely difficult for a user to alter the ledger once a block in a blockchain has been stored.