Last updated: August 19, 2019 2:45 AM

“The practical consequence […is…] for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.”

– Marc Andreessen

From a cruising altitude, a blockchain might not look so different from the things you’re familiar with, says Wikipedia.

With a blockchain, many people can write entries in an information record, and a user community can control how the information record is modified and updated. Similarly, Wikipedia entries are not the product of a single editor. No person controls the information.

However, descending to ground level, the differences that make blockchain technology unique become clearer. While both run on distributed networks (Internet), Wikipedia is integrated into the World Wide Web (WWW) using a client-server network model.

A user (client) with permissions associated with their account can change Wikipedia entries stored on a centralized server.

Each time a user accesses the Wikipedia page, he will get the updated version of the “master copy” of the Wikipedia entry. Database control remains with Wikipedia administrators allowing access and permissions to be maintained by a central authority.

Blockchain Technology

The digital backbone of Wikipedia is similar to the highly protected and centralized databases that governments, banks or insurance companies maintain today. Control of centralized databases rests with their owners, including update management, access and protection against cyber threats.

The distributed database made by blockchain technology has a fundamentally different digital backbone. This is also the most distinctive and important feature of blockchain technology.

The “master copy” of Wikipedia is edited on a server and all users see the new version. In the case of a blockchain, all the nodes of the network reach the same conclusion, each one updates the registry independently, and the most popular registry becomes the official de facto registry instead of having a master copy.

What is Blockchain Technology

Transactions are transmitted and each node is creating its own updated version of events.

It is this difference that makes blockchain technology so useful: it represents an innovation in the registration and distribution of information that eliminates the need for a reliable part to facilitate digital relations.

However, blockchain technology, by all its merits, is not a new technology.

Or maybe, it is a combination of proven technologies applied in a new way. It was the particular orchestration of three technologies (Internet, private key cryptography and a protocol that governs the incentive) that made the idea of ??the bitcoin creator Satoshi Nakamoto so useful.

What-is-Blockchain-Technology

The result is a system for digital interactions that a reliable third party does not need. The job of securing digital relationships is implicit, provided by the elegant, simple but robust network architecture of blockchain technology.

Defining digital trust

Trust is a risk judgment between different parties, and in the digital world, determining trust is often reduced to proving identity (authentication) and testing permissions (authorization).

Simply put, we need to know: “Are you what you say you are?” And “Can you do what you want to do?”

In the case of blockchain technology, private key cryptography provides a powerful proprietary tool that meets authentication requirements. Possession of a private key is property. It also prevents a person from having to share more personal information than they would need for an exchange, leaving them exposed to hackers.

Authentication is not enough. The authorization (having enough money, transmitting the right type of transaction, etc.) needs a point-to-point distributed network as a starting point. Distributed networks reduce the risk of corruption or centralized failure.

This distributed network must also be committed to the security and maintenance of transaction network records. Transaction authorization is the result of the entire network applying the rules on which it was designed (the blockchain protocol).

Authentication and authorization provided in this way allow interactions in the digital world without relying on (expensive) trust. Today, entrepreneurs in industries around the world have realized the implications of this development: unimaginable, new and powerful digital relationships are possible. Blockchain technology is often described as the backbone of a transaction layer for the Internet, the Internet basis of value.

In fact, the idea that cryptographic keys and shared ledgers can encourage users to secure and formalize digital relationships makes the imagination go crazy. Everyone, from governments to IT companies and banks, seeks to build this transaction layer.

Authentication and authorization, vital for digital transactions, are established as a result of the configuration of blockchain technology.

The idea can be applied to all the needs of a reliable registration system.

images by Maria Kuznetsov

Article Source: http://www.coindesk.com